Amwins has highlighted in its Q123 State of the Market report, that due to the dislocation within the property market, reinsurers are being “extremely cautious” with all their capacity, which ultimately may have an adverse effect on the casualty market further into 2023.
The report states that capacity, rate, terms, and ceding commissions are all in play for the upcoming treaty renewals.
At the same time, Amwins notes that we are yet to see the effect of the US court system coming back to life after a long period of low activity due to the COVID-19 pandemic.
However, the report warns that the potential effect of recent nuclear verdicts, in addition to rises in medical inflation, heavily suggests that the road ahead will “not be smooth.”
Amwins noted that overall pricing in the casualty market remains on trend from its previous report. In the primary space, renewals remain largely flat except, for the usual challenged classes, which includes heavy auto-exposed, habitational, trucking, healthcare, hospitality, and liquor liability. Carriers are continuing to analyse and re-evaluate their books in challenging classes and venues, and they are altering terms, adjusting rate, or exiting classes entirely.
Further, Amwins stated that the excess space continues to remain active with moderate rate increases ranging anywhere from flat to 15%, depending on account size, losses, and risk exposure. Carriers are also showing hints at expanding limit offerings in the excess, and are more willing to look at lead layers below $10 million where the rate on line is more favourable.
The report reads: “These dynamics have made renewals a bit easier to predict giving brokers the ability to better prepare their clients and insureds. This is in contrast to the past few years of major rate swings and capacity reductions.”
Meanwhile, with the market somewhat settling, carries are now focusing on growth and looking to add new business to their books, with the focus in London being on commercial construction, product manufacturers, and rail transportation.
Amwins also highlights how significant capacity still remains in the Bermuda market with new markets deploying attachments as low as $5 million – $10 million with attractive pricing, terms, and conditions.
Additionally, within the US there is huge interest from carriers to diversify their books by focusing on smaller and middle market accounts ranging from $10,000 to $75,000 in premium, with some carriers even beginning to launch business units to focus on this space.
Lastly, within the small business sector, rate increases and term restrictions have slowed with the exception of hotel/motel and habitational, as well as assault and battery and liquor liability coverage (in tougher states).
Amwins states that markets continue to refine eligibility criteria and terms they are willing to offer on targeted classes within their portfolio.
