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Global Marketplace Insights – Europe Q3 2024

Market Insights

October 22, 2024

Nicoletta Cossutta, Head of Broking Europe, discusses the market dynamics in Europe from a capacity and pricing perspective.
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Europe insurance marketplace update

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

Transcript:

Q3 2024 Global Marketplace Insights

0:03
Welcome to WTW's Global Marketplace Insights series, where our experts bring you the latest risk and insurance perspectives.

0:20
Buongiorno, and welcome back to the European marketplace update series, where we try to uncover our view of the status and trends of the European commercial lines insurance market and give you an outlook in preparation of year-end renewals. The European commercial lines insurance market continued to exhibit stability but with some lines of business continuing to soften steadily.

0:47
Overall, capacity in the continent remains sufficient, thanks to the strategic international expansion of many insurers across the region looking at new growth opportunities. While insurers, are eager to grow and invest, especially in a market with favorable risk profiles, the allocation of this capacity is marked by a disciplined focus reflecting a comprehensive market dynamic and risk consideration.

1:16
We are still in what we call a two-tier market. So businesses with strong risk management practices, particularly those with favorable data and loss ratio, for those risks, capacity is available and easily accessible. This includes businesses that are able to provide comprehensive underwriting information and have demonstrated a track record of managing risk effectively.

1:40
However, higher risk sectors continue to face significant challenges. Sectors with catastrophic exposures or complex underwriting often find capacity more limited, and insurers remain cautious about taking on new risk in these areas. In many cases, insurers are approaching these risks with a more disciplined mindset, carefully balancing market dynamics and broader risk factors.

2:11
We have a few highlights from our different lines of business, to give you a flavor and a summary on the main products. Let's start with property, the property insurance market is currently in a growth phase following several years of portfolio remediation. Insurers are now eager to pursue new businesses, particularly in the mid-market, for retention purposes. For many insurers, retaining existing clients is a key priority, as it plays a crucial role in driving overall growth.

2:42
The casualty space has also seen growth. But many insurers have ambitious growth targets, which has contributed to an increasingly competitive environment.

3:07
As year-end approaches and budget concerns intensify, we see further downward pressure on rates. At the same time, capacity for higher risk sectors, particularly those with significant US exposure and loss-impacted renewals, remain impacted.

3:29
We have also heard ongoing concerns from carriers about the effects of economic and social inflation on a global scale. And this is continuing to shape risk appetite and underwriting decisions in some occasions. In the financial lines insurance market, the Directors and Officers (D&O) market, is continuing to soften, and there are no signs of stabilization.

3:56
This trend is also present in other areas of the Financial, Professional and Executive Risks market, including cyber and the Financial Institution (FI) insurance market. Additionally, what we have seen in Q3 is that the previously stable professional indemnity (PI) market is now showing early signs of softening.

4:18
In the construction sector, we are expecting the sector to decelerate in the coming years, largely due to the economic challenges facing the industry. This includes high interest rates and inflation, which has harmed investment across the region, largely driven by persistently high construction costs, fueled by rising material expenses, but also shortages in skilled labor.

4:46
WTW construction teams are observing signs of market stabilization and expecting flat rates or modest reduction for top-tier risk in smaller and midsize, domestically placed programs or projects. However, for larger and complex projects, construction value has significantly increased. We anticipate low double-digit rate increases and output is expected to recover by 2025.

5:15
Last but not least, the crisis management market, continues to be shaped by geopolitical and social economic factors. Hostilities in the regions such as Ukraine and Middle East, along with the worsening security conditions, are contributing to changes in policy terms and pricing.

5:40
Overall, as you may hear from my colleagues in other regions and our global lines of business leaders, the insurance industry remains highly competitive, with carriers actively seeking growth opportunities. Insurers are trying to proactively combat the volatility of some insurance lines while maintaining high technical underwriting standards in order to achieve their targets of maintaining a healthy portfolio.

6:08
So in these circumstances, we continue to remember how crucial it is to provide detailed, comprehensive submissions to help make informed decision. Risk quality and thorough data are key to unlock capacity and obtain favorable pricing for our clients. In fact, given the unpredictable and potentially volatile capacity across various industries and Natural Catastrophe (Nat Cat) appetite. We strongly recommend our clients to engage with our local brokers as early as possible. While we are equipped to handle shifting market conditions, late and uncertain renewals can be challenging and stressful for everyone involved, and we want to try to avoid that as much as possible. So early engagement is really crucial for a smooth renewal process. with your broker being key in exploring innovative solutions to be able to meet your goal, including alternative risk transfer strategy or utilizing some of our risk analytic offerings.

7:28
While we continue our effort to keep you as updated as possible, both via the series of market update videos and our quarterly European market trend report, where you can find more specific-details for each of the points that I've just mentioned. This report is publicly available and you can find it on our website. So feel free to download it.

8:02
But as well, reach out to your local broking teams or to me directly if you need any help to navigate the current market condition, as we really want to make sure that we bring you all of the WTW global expertise and solution. So with that, thank you very much. And please don't hesitate to reach out, as we are here for you.

Contact


Nicoletta Cossutta
Head of Broking & Strategic Initiatives, CRB Europe
email Email

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