The insurance market is calmer and less volatile than in recent months. The
established markets are fighting to retain market share, and the new markets are
struggling to make budget. This has had the effect of preventing the muchheralded
hard market.
There are a few pockets of resistance in the market for risks such as energy and
those with poor loss records—otherwise the market at the lead level is flat.
The excess market remains competitive due to the fact that new markets continue
to provide a great deal of competitive tension. While senior management are
pushing for rate increases from their underwriters, market forces continue to exert
a steady hold on the insurance rate environment.
What is the outlook in the future? Despite the fact that the well of past reserves
scheduled to be released is drying up and that there is a greater need for capital
required by different regulators, and weakening cash-flow for insurers may create
pressure on rates, there are no strong signs at present of upwards movements.
In London, the market for U.S. risks is being strongly led by Lexington, which has
capitalized on the continuity of its underwriting staff. They have recently taken on
several new lead accounts.
There is speculation about other markets seeking to enter the lead market but this
remains something to watch for in the future. XL London, Berkshire Hathaway,
Aspen, Cat Excess, and Catlin all continue to offer options and still attract a very experienced underwriting workforce for U.S.-based
risks. Iron-Starr Excess intends to open an office by year end.
At an excess level for U.S. risks, the new markets (Argo, Torus, Iron-Starr Excess, Aspen, and Canopius) are seeing huge submission
flow and are binding accounts regularly. Their binding ratio is obviously higher where submissions are sent to them on a qualified
basis by those that understand their various appetites.
The longer-term markets such as XL, ACE, Allied World, Arch, and Cat Excess are striving to maintain market share as well as
seeking new business. All this has served to create a competitive market for all but the most exposed risks.
For non-U.S. risks, the market dynamic remains unchanged from our Spring Lockton Market Update. There is a tremendous amount
of capacity in London, Dublin, and elsewhere in Europe for non-U.S. risks—especially at the excess level.
Pricing remains competitive.
Chartis has recently announced an initiative to write Australian business from London, and the market in London is vibrant for risks
from all over the world.
The product recall market continues to grow for U.S. and non-U.S. risks. Catlin, XL, Sagicor, Canopius, Liberty, and Chartis (for
non-U.S.) are all creating a competitive landscape for primary risks. Aspen and Argo have joined XL Dublin and Max in the excess
space.
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Please contact your Lockton Representative for further information regarding any information contained in this
market update.
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