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UK property and cyber markets remain challenged

24th May 2022 - Author: Pete Carvill

The property and cyber markets in the UK remain challenged, according to Aon’s latest Q1 Market Dynamics Outlook: The United Kingdom.

The firm said that conditions within the property market remained challenging, but were expected to stabilise, while geopolitical events in Eastern Europe continued to exacerbate and complicate the cyber landscape.

Aon wrote: “Property market conditions are expected to continue to stabilise compared to previous years. Rate adjustments will remain but will be moderate relative to prior adjustments. Available capacity is expected to be sufficient for most risks. Specific industry sectors (such as elements of the food industry, waste and heavy trades), loss impacted programs, and risks where risk management and progression is not evident will continue to experience more challenging conditions, including more severe pricing correction and capacity restrictions. Maintaining the discipline of proactive market engagement, addressing the information demands of insurers and evidencing commitment to risk management will continue to apply and remain the way to outperforming the market for all clients.”

Around cyber, Aon said: “Underwriting remained time-consuming and demanding; while rate increases and capacity reductions continued. Current cyber market conditions are expected to continue and may be further challenged depending on the impacts from the geopolitical events in Eastern Europe.

Other markets, said the insurer, were moderate. These included the automobile, casualty and liability, trade, employers liability and workers compensation, and directors and officers markets.

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Regarding automobile, Aon said: “Although claims inflation remained a challenge in Q1, stable market conditions continued. Insurer appetite was healthy for well-performing risks. Early renewal engagement yielded superior placement results. Insurers competed on various competitive elements. The automobile market is expected to expand through new insurtech entrants. Electric Vehicles will continue as a space to watch. Claims inflation is expected to continue to pose challenges and give rise to potential price increases.”

The focus within casualty and liability, said Aon, has shifted towards growth with competition driving a more moderate environment than in 2020 and 2021.

It added: “Long term agreements have returned to the market, with terms up to three years. Current casualty/ liability market conditions are expected to continue but this outlook may change depending on the inflationary / economic impacts of the geopolitical events in Eastern Europe.”

There had been some elevation of risk profiles within the trade market, due to inflationary pressures and economic headwinds from the tapering of Covid-related stimulus. This was put into the context of supply chain issues.

Market conditions, meanwhile, had stabilised within employers liability and workers companesation.

Aon wrote: “The market in the UK continued to be dominated by a few large insurers as appetite to write this cover on a standalone basis has decreased. An increased focus on inflation / the cost of living is expected as this could lead to claims escalation which could, in turn, impact rates.”

Lastly, the directors and officers market saw conditions improve with new capacity and insurers entering the market.

Aon added: “As insurers continue to focus on portfolio growth, appetite is expected to continue to expand, and market conditions may further improve. Insurers will keep a watchful eye on the developments and implications related to the geopolitical events in Eastern Europe.”

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