Analysts at Alliant have predicted that new insurer entrants will be “almost non-existent” for 2023 as the property market grapples with the changes to reinsurance pricing and terms.
In an end of year report, Alliant noted that insurance to value was an issue for the property market throughout all of 2022 and will continue to be under stringent examination from insurers with large probable maximum losses and average annual losses.
This is partly due to global inflation and economic uncertainties, which are causing an increase in the cost of capital, so regardless of severe storm activity, rates are expected to rise.
All accounts will continue to be subject to valuation discussions, which will cause additional pricing increases, with significant reductions also expected for natural catastrophe limits and a lack of availability of excess layers on large programs, Alliant says.
Non-catastrophe exposed insureds that have not had losses are unlikely to see the same degree of rate increases, analysts report, although they will still see some increase due to wider market pressure to cover increased treaty costs.
Additionally, deployment of global capacity will remain strategic and highly scrutinized for the foreseeable future, with reductions expected for expiring program committed capacity, particularly for catastrophe exposed accounts.
Meanwhile, liability capacity for habitational clients continues to be limited but not reduced, as most carriers have already exited the market, while commercial real estate liability capacity is readily available for buyers with favourable experience.
Overall, Alliant reports that coverage remains stable for property, but carriers are seeking to attach margin clauses and occurrence limit of liability endorsements when valuations are in question.
In some cases, carriers are also seeking to increase AOP deductibles, with tier 1 named windstorm percentage deductibles likely to increase as carriers pass along increased retentions required by reinsurers.
