0:03
SPEAKER 1: Welcome to WTW's Global Marketplace Insights series, where our experts bring you the latest risk and insurance perspectives.
0:21
THOMAS HADDRILL: Hello, I'm Tom Haddrill, Head of Broking here at WTW for Central and Eastern Europe, the Middle East, and Africa, or CEEMEA, as we refer to it. I'm delighted to be back here again to provide one of our marketplace update videos. I'm speaking to you from the heart of the global insurance market in the City of London, but I'm going to be covering conditions and developments from countries across emerging Europe, the Middle East, and Africa.
0:42
In the past two quarters, we've observed encouraging signs of a more optimistic market for buyers. I'm eager to discuss the opportunities we're identifying for our clients, plus any risk managers interest in exploring them further, of course.
0:56
But first, let's recap the global position. Since 2015, we've seen prices rising and terms tightening in the global insurance and reinsurance market. This kicked in particularly strongly during and after the pandemic. In lines where catastrophe events had impacted results or where reinsurers were seeking to get a handle on exposures or both by the way, we saw a very hard market running all the way into mid-2023.
1:20
From this point, global pricing started to soften alongside increases in capacity. Nevertheless, we've seen insurers reporting record full-year 23 and half-year 24 profits. But where does all this leave us in CEEMEA? In terms of capacity, coverage, and pricing, I'd categorize the situation as improving, with a definite positive outlook for clients as we run into January 1st renewals.
1:44
In the Middle East and Africa, we saw property conditions improve in the early part of the year. We saw reductions in price and an easing of terms, particularly for well-risk-managed and attractive accounts. Clients in high-risk occupancies did continue to see moderate increases, but often driven by price rises for natural catastrophe risk, strikes, riots, and civil commotion extensions, and for those buying contingent business interruption.
2:09
However, with the floods in the UAE, we have seen major increases in price in the middle part of this year, with reinsurers having taken losses from the event. Nevertheless, the Middle East is an area of focus for many carriers, and WTW has been able to generate competition to good effect. We continue to invest in the region, expanding our footprint and capabilities to service clients, and our insurer partners are definitely on that journey with us.
2:34
For casualty in the Middle East and Africa, we saw the market as flat to softening slightly. We saw some welcome new capacity enter and increases from incumbents. We also saw greater flexibility in South Africa and some long-term agreements were put in place there. As to financial lines, that's (Directors and Officers) D&O, professional indemnity, financial institutions, and cyber rates continue to decline as capacity grew and carriers adopted an aggressive stance.
3:00
For cyber, this is a reversal of a very tight market in recent years. So there is some way to go on pricing, and with scrutiny on catastrophic events following the CrowdStrike incident, I don't see coverage expanding rapidly in the coming quarters. Specifically, we saw more aggression from carriers in the Middle East, with South African carriers taking a more cautious approach to pricing and terms.
3:22
In Central and Eastern Europe (CEE), stability was the name of the game. Pricing and scrutiny on terms increased moderately in casualty lines, with a slight overhang from reserving in the US and a generally cautious global outlook. In financial lines, pricing declined, but slower than before. Larger clients and those with evidence of strong risk management will still be in a good negotiating position.
3:45
And at WTW, we're working to develop a very strong proposition to negotiate solutions on behalf of clients for Financial, Executive and Professional Risk (FINEX) covers. We see the market at a tipping point in this region and be keen to discuss this with buyers. Rate rises were more moderate in property as the year of elections progresses. We are, though, seeing scrutiny from underwriters on a firm's exposure to geopolitical instability. However, for me, the big determining factor was Natural Catastrophe (NatCat).
4:09
Parts of Europe that were previously thought of as more mild catastophe zones are being hit hard by events from floods all the way to wildfires. And now, we've seen devastating floods as a result of Storm Boris right across Central and Eastern Europe. There's been a tragic loss of life, and the damage has highlighted the need for far greater investment in protection.
4:28
The insurance market impact of the floods still remains to be seen. Initial estimates will vary in the coming weeks, but it is clear that losses will hit the reinsurance market. Primarily, this will come from a handful of large carriers that are heavily invested in the region.
4:43
So what does all this mean for strategy in the market? Well, it does sound positive, and carriers are in growth mode. We're taking calls asking for participation on certain statement accounts every day. However, certain elements remain true-- challenging occupancies, niche industries, firms with ESG exposures, or those which are seeking cover for peak catastrophe perils, and political violence will continue to require creative solutions.
5:10
While most underwriters are not remediating, we are seeing a shift to a constant process of addressing frequency and attrition. As a result, we advise engaging early with your WTW broker to leverage our global reach, and discuss a nuanced approach to your placement. We also encourage the use of our unique risk and analytical tools to have a robust understanding of your program. This can provide some really meaningful insights as we go into the end-of-the-year renewal season.
5:36
As we start to see the green shoots, there are a multitude of ways that we can work with clients on optimizing strategies. For instance, a focus on group insurance arrangements targeting the most active carriers, or investing now in risk management, possibly in partnership with insurers.
5:52
In short, I really do see opportunity for us to use our analytical approach and specialist industry knowledge to get you and your program onto the front foot. And, I also hope that cricketing analogy works outside South Africa. Thank you for listening to this, and I look forward to speaking with you again soon.
