Aon’s latest Q2 Market Dynamics Outlook: The United Kingdom has cast an eye over the country’s moderate markets.
The firm said that the property market continued to stabilise in Q2 following previous underwriting adjustments, improved insurer results, and a focus on growth. However, while upwards price adjustments continued, it said that the rate of increased slowed.
It wrote: “Property market conditions are expected to continue to stabilise in Q3, driven by growth plans from incumbent insurers and from new capital entering the market. The opposing force is inflationary pressure, which may in turn put pressure on pricing. Loss-impacted risk types will remain challenged. Maintaining proactive market engagement and addressing the information demands of insurers will remain critical to achieving superior outcomes.”
While conditions did improve in the property market, Aon said that there remained challenges for certain sectors such as food, pulp and paper, and heavy industry, alongside loss-impacted risks.
On a global perspective, it said that improved insurer performance has attracted new capital and served to moderate property market conditions for most risks, with the notable exceptions of higher-risk industries, loss-impacted programs, or where risk management and progression was not evident.
It added: “Market improvements have been somewhat dampened; however, by reinsurance price increases, a continued elevation of supply chain risk, and increased climate risk. In addition, valuation scrutiny continued, with impacts on capacity, coverage sub-limits, and pricing. The predicted high-impact hurricane season has accelerated the pace of innovation related to catastrophe management tools (e.g., satellite imagery and the use of Synthetic Aperture Radar).”
With casualty and liability, it pointed to a moderation in market conditions and a deceleration in the pace of increases. It said that inflation was a key concern and would remain so, but healthy market competition was to be driven by insurer growth objectives.
However, it added: “These impacts may be tempered by inflationary pressures and resultant rising claims costs, as well as continued uncertainty related to the geopolitical events in Eastern Europe.”
Aon said that on a global perspective with casualty and liability, market conditions were generally stable, but pricing and capacity varied by industry, exposure type, and attachment point.
It added: “Social inflation and nuclear verdicts continued to impact underwriting and pricing strategies, as well as loss development. Key underwriting concerns were per- and polyfluoroalkyl substances, wildfire, sexual abuse, and climate change.”
