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Global Marketplace Insights Q2 2024

August 13, 2024

Global insurance market themes for Q2 2024.
Aerospace|Casualty|Claims|Corporate Risk Tools and Technology|Environmental Risks|Financial, Executive and Professional Risks (FINEX)|Risk and Analytics
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Q2 2024 Global Marketplace Insights

Hear from our global experts and learn more about the latest insurance marketplace trends

Despite some significant losses, there was a general sense of optimism among insurers in Q2 2024, many of whom are keen to grow throughout the rest of year. However, more upbeat perspectives were tempered by insurers’ cautiousness as they approached the second half of the year, with some nervousness around meeting growth expectations, the need for competitive pricing and ongoing inflation concerns.

From a pricing perspective, the market is becoming more favorable. There is a noticeable increase in capacity, with new international and local market entrants plus existing players expanding their appetite into new classes of business. This competition is driving improved pricing, particularly for non-catastrophic property risks for which we are seeing significant insurer appetite.

Barring some major losses this summer, given insurer growth targets, clients overall are experiencing slight tailwinds, moving away from the headwinds of 2023 - key themes below.

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Overall stable market conditions

The insurance market has shown stability with good results in the first quarter and with similar expectations for Q2. Insurers are managing the environment well despite some significant losses, such as those from marine incidents and early-season hurricanes.

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No significant softening in terms and conditions yet

The market is in the softening phase of the current cycle, in which clients are seeing pricing benefits and some capacity expansion. At this point, terms and conditions have not broadened significantly, although this is a feature that has followed later in previous cycles.

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Regional variations and opportunities

Different regions are experiencing varied market conditions. Latin America and Asia are seeing favorable renewals; with the Far East and Australia for example benefitting from new local capacity. Other areas of the market remain stressed, such as UK motor insurance, where claims inflation is driving significant increases in premium, and the US casualty market which is also experiencing some pressure from rising court awards. In addition, the ability of catastrophic perils to aggregate continues to be a concern, with insurers carefully managing their appetite and pricing in these areas.

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Proactive market engagement can maximize your risk dollar

Heading into renewal with a clear strategy and understanding of market dynamics can help you secure better deals and coverages more closely matched to your needs, optimizing your budget across all insurance lines. Looking ahead, you should prepare to market your business early and as effectively as possible to insurers, challenge incumbency and take advantage of the increased competition to secure more beneficial terms.

Staying up to date with market insight can help you make the most of changing conditions. To enable you to adapt your risk and insurance strategies and maximize your risk spend, we’ll continue to provide quarterly updates into specific lines of business and geographies.

For more actionable insights on current market conditions for individual lines of business and geographies, access our industry webpages below.

0:19
Welcome to the second quarter market video where we give you an update on what we see in the market around the globe on various lines of business in a shorter crisp video to get you up to speed with the latest in in the market.

0:37
So I'm here with Swifty as we are every quarter.

0:41
This time we were a little bit into Netherlands to England.

0:44
This is recorded the night before.

0:46
So we don't we don't know the outcome little semis, let alone the finals.

0:51
So, we'll probably have a laugh a bit after that.

0:55
So let us get started.

0:56
When we came over a good quarter for insurance in the first quarter, we discussed in our last video the sounds I get, some bites I get from insurers is that second quarter is sort of in a similar vein, nothing overly serious in results.

1:14
Do you hear anything different from your angle?

1:17
No, I think I mean, obviously there have been some significant losses in the market overall.

1:22
You think of, you know, certainly from a marine perspective, you know, there have been some big losses.

1:28
There's obviously been a hurricane now down early season in, a strange bit of the Caribbean.

1:33
But I think even if you look at all of those sort of major events that have happened, most of them are within people's expectations.

1:41
And so I think insurers should be managing the environment on the whole very well.

1:47
And I think if we speak to most insurers at the moment, they're pretty upbeat around where they are, what their what their results are across most lines of business.

1:56
I mean and getting a little bit into the expectations that they all I would say start to get a bit nervous around the second-half year.

2:04
But there's sort of a tension of everyone is in sort of the same space.

2:08
There's good results.

2:09
Everyone still wants to grow throughout the year.

2:14
There's a little bit of worry as we said in the last quarter of video, like there's no inflation, the rate is not going to increase as much as we think it is.

2:22
There's hardly anyone remediating. There's sort of pockets that are a bit of an issue, but you see the same as around the globe with everyone that it will be quite difficult for everyone to match up with the expectations they've got.

2:36
I think, you know, it's...and this is going to be one of the interesting dynamics that we always see when the cycle you know ends up in this position is you're going to have people struggling on renewal business to be able to match the needs from a rating perspective that you know that might be being put out there by insurers who are looking to try and attract business that they don't have today.

3:02
So I think incumbency you know could probably be an impediment to some insurers growth.

3:08
But you know, certainly you know, we are keen to see that competition come into the market again.

3:15
And I think if you're an insurer and you don't have a large portfolio in a particular area and you have this growth mode and you have this growth desire, I think you're going to end up being quite aggressive so that you can actually track that business in.

3:28
Because I think in most areas of the business, most insurers are talking about the fact that they've got price adequacy.

3:35
And you know that there's a little bit of flexibility that can come in for good quality accounts with good information with, you know, that’s marketed in the in, in the right way.

3:45
But there's definitely a difference between a renewal market and a new market.

3:51
And the other thing I, I sort of recognize around the globe is that sort of that your international markets, your international players along the market that goes around the globe, there's an increase in capacity, but also ability to quote from local markets, whether it's around the globe. Europe especially, I mean, far East, Australia where there's new local capacity coming in.

4:18
And similarly with, with Latin America.

4:21
So it's, it's not just the international market competing against each other, it's also sort of the local markets.

4:27
And the sort of the balance between the two is, I wouldn't say shifting, but there's sort of tension, which is good for clients because you get choice between local and international on that side.

4:37
And and again, you know, unfortunately both of us have been around long enough that or fortunately that we've seen a few of these cycles.

4:45
And I don't think this is vastly different to other cycles that we've seen, and you know, potential for shift from international markets to local markets. Yes, absolutely that is, you know, that is there, but I don't think it should be something that, you know, certainly clients shouldn't be worried about.

5:03
I mean, to them, you know, it should be a very positive factor.

5:08
And you know, our roles are to try and maximize that, you know, on a global scale for our clients.

5:13
So, you know, looking forward to the challenge there.

5:17
If you look at, I mean the capacity and the way it's being put to clients in combination with the conditions, will you agree that capacity is not shrinking and even sort of increasing in certain areas?

5:28
Yeah, I think I would say there's definitely an increase of capacity because there are some new markets that have come in who either have expanded their appetite into new classes of business or you know, have a growth agenda and therefore looking for new areas to deploy it.

5:48
What we, what I don't think we're seeing yet though is a huge softening in the terms and conditions that they're offering.

5:56
So you know, yes, there's potential pressure from a pricing perspective in certain areas and you know, competition from that perspective.

6:04
But we haven't all over seen sudden seen this massive broadening of terms and conditions across the market.

6:10
And it's probably too early in the cycle for that to start happening.

6:15
Normally the first thing we'll see is, you know, pricing, maybe an expansion of limits comes with that, you know, potentially then deductibles and then, you know if the market continues in this vein without something interrupting it from a sort of a loss or capital perspective.

6:33
The last thing that gets affected is and you know broadened in client's favour is coverage.

6:39
And I think it's not the best for clients.

6:43
I mean, especially if you look at where we are and we have talked about the coverage gap and we want to talk around sort of the difference between risk of clients and so the available products rather than just go around price.

6:55
I mean, we would love and that's, that's what we try to do with our teams as well is to get a bit more relevant coverages in there to sort of build the product back up to where we believe it's better for the client and more relevant.

7:08
And not only by sort of getting stuff in that has been cut out in the past.

7:13
We don't want to lose a shirt on stuff that's out there.

7:16
But there is either new risks or old risks that are now better managed or better insights that we actually can improve the quality of the product and maybe not sort of get it to the rock bottom on the price, but get a bit more, again, relevant products for our clients.

7:36
I couldn't agree with you more.

7:37
And I mean, I think one of the things for us and to help clients with is actually try in this environment and match their needs, right.

7:47
So, you know, sometimes it is price, right. For clients, they might be under specific budgetary pressures or have issues from that perspective.

7:56
Other times it is breadth of cover that is going to be important because you know, they don't want to use their capital in, you know, to the same degree as they have in the past.

8:04
They certainly think one of the trends we have seen this time round is, you know, I haven't seen a rush from clients all of a sudden to buy more limit now that it's available or to try and change the retentions that they are holding.

8:18
They are very focused on, you know, actually we got quite comfy with, you know, frankly how the market had treated them in the last few years of assuming more risk in certain areas themselves and they are not rowing back from that now.

8:30
They may do if the market comes more in step and it becomes more competitive to transfer it.

8:36
But you know, one of the key things for us is to use our analytics capability to analyse that for clients to make sure we are looking at what the most cost-effective solution is for them still in a, in a market that's changing from pricing perspective.

8:51
Yes, spending the dollar in the right, the right way, the dollar in the right place.

8:54
And I and I believe I mean again, we're working with markets not only on individual project, but also on industry level to sort of tailor them to sort of the right, the right capacity, the right conditions and then sort of the right pricing across a portfolio, just not just an individual line of business, but across portfolio.

9:12
So yeah, we do see around the globe more interesting to into the ability to model risk and then sort of get the right price out.

9:22
Moving on a little bit further on.

9:23
So what I mean it's not all rosy in the market.

9:27
What kind of main issues do you see with insurers on sort of individual lines or business or pockets or there's obviously still Ukraine, there's still Israel where we struggle with sort of conditions around, around a challenged environment, anything.

9:45
So I still, I mean, you know, certainly from my perspective, I think still think anything that is an aggregated sort of catastrophic peril in some form.

9:55
You know, there is still nervousness of in the market and you know, people are watching very carefully what they do in those spaces and managing their capacity and managing the pricing of those products quite carefully.

10:09
You know, there are also some still quite stressed areas of, of the markets, you know, in, if I think about it in the UK, if you look at what's happening to motor insurance premiums here, they're skyrocketing, right?

10:22
And you know, I feel that myself, right?

10:24
So, you know, and I think back to the bike.

10:31
So, but you know, you, absolutely can feel it.

10:35
And I think, you know, you've seen the same thing in the U.S. and a lot of it is of that is driven out of claims inflation that has come through.

10:43
And therefore the results that that the insurers are having, you know, in the U.S. particularly some, you know, quite interesting judgements and awards that have come through.

10:53
And so, you know, we've got to be quite careful.

10:55
You know, we can talk about the market in general and you know, where it's headed, but there are still these pockets of, I'm going to say stress that exists in the market that will affect clients and will affect, you know, how they buy.

11:07
And that's why, you know, going back to what I was just saying before, actually thinking across the whole portfolio from a client from a pricing perspective is what we need to what we need to look at.

11:16
Because although you might get some relief in one area, you might not get it in, another.

11:21
And you know, definitely motor think the U.S. casualty market, again, you know, is under pressure slightly from the point of view of the results.

11:29
So we're starting to see a little bit of stress there too, but it's, it's those sort of things that, you know, we need to be quite nuanced about.

11:37
And you know, frankly, the earlier we can engage with a client, the more we can work with them around their portfolio and what, and how they can maximize, you know, the budget that they've got across all of these lines of business to best meet their needs.

11:50
And there's certain parts, as you say, which I mean, we've seen a couple of sales in, the mid-market in the U.S. sort of portfolios that have been transferred to others.

12:03
I must say, I mean  there's still appetite to actually buy.

12:05
So there's others coming in and actually trying to fix that.

12:08
But it is an overall market view that we give here.

12:11
And it's sort of individual pockets that I mean the space market is still sort of quite difficult.

12:17
And so, it is, it is having a discussion with your account exec and your broking team to make sure that we can explain to you and so you understand where the market is going.

12:28
So on pricing in general again, and we know we're generalizing here, but in general on pricing, it is getting better for clients.

12:35
Oh, definitely.

12:36
I mean, it is a more favourable environment than we've certainly seen in the last 12 months.

12:42
And you know, barring some, you know, major losses this summer, I think that's probably set to continue for a little while to come this year because that competition is there, and the insurers have these growth targets and objectives.

12:59
And, you know, the global economy, and inflation is not driving asset value growth to the extent that you know, is going to meet these growth needs that, you know, these insurers have.

13:13
So, you know, the only way that comes is through competition.

13:17
So I think that's probably set to continue in, you know, in certain areas, but they're still mindful overall, I think of the pricing parameters.

13:29
So you know, as we look at it, I would say there's a, you know, moving, we're moving from headwinds to slight tailwinds.

13:37
If I'm an insurance buyer.

13:39
The other thing we've seen around the globe is that some of the better risks come to market, which is not a sort of an example for everyone.

13:48
But I mean, especially Latin America has seen some very favorable renewals.

13:54
We've seen similar in in Asia where some larger high-quality risk and to market.

14:01
And all of a sudden there's some good deals to be had in Australia again, there's new markets getting in there.

14:06
Two years ago everyone was just leaving.

14:09
There's seven or eight new markets out there sort of getting in there.

14:11
So there's good deals to be it looks a bit like U.S. a little bit more stable apart from financial lines, which has been sort of software for a while.

14:21
Europe a bit the same. But if you know, if there is such a thing as non-cat property, as an example, UK sometimes gets put into that bucket very competitive right at the moment.

14:38
So I think, you know, good risks with which are non-cat exposed, there is significant appetite for from insurers and that's leading to, you know, I'm going to say improved pricing for clients in, that space.

14:53
So you know, how you can portray your business, how you take it to market is vital, right?

14:59
If you're going to capture those benefits a little bit into the sort of the advice to clients is, again, as we always say, it's come prepared, have your strategy, understand where you want to go, have a few on where the market is.

15:13
And, and get into the market early, right?

15:16
It's, just because you start early doesn't mean you have to finish early, right?

15:22
But there is definitely an opportunity to market your business to look after those insurers that have looked after you, but also, you know, challenge incumbency.

15:34
It's a bit more happy days for clients concluding on the call.

15:37
I mean, it's been and hopefully a happier day for England than the Netherlands tomorrow.

15:41
Well, good luck with that.

15:42
And we'll, start our next maybe I'll start with an England tie, or you start with an orange one.

15:48
So now thanks for watching and looking forward to giving you an update on the third quarter in a couple of months.

This transcript provides an approximate outline of the verbal discussion, for further clarification please contact as below.

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