Property International
Large line deployment boosts capacity
Continuing into the second half of 2024, risk appetite and a thirst for premium income are both strong in the London Market. Generally, most companies and syndicates have looked to deploy larger lines in the first half of 2024 and this abundance of capacity has naturally led to increased competition and favourable outcomes for insureds, with single-digit rate decreases becoming the norm for claims-free accounts. Through facilities and lineslips, several Lloyd’s syndicates are now more amenable to considering portfolio solutions as they look to capture smaller business that may have not traditionally come to London.
Changes in policy terms and conditions
There have been no meaningful changes on policy terms and conditions. As global inflationary pressures have subsided, there has been less requirement for up-to-date valuations. If capacity and competition remain stable, we expect enhancements in coverage and limits to become more commonplace.
Underwriting changes
Fidelis has launched its Syndicate 3123, aiming to write ~ USD 180m of business in H2 2024. Insurx, the ‘Smart Consortium’, can offer up to USD 17.5m follow capacity to an AUW lead, via Antares, Beazley, QBE, Axis, IQUW, MS Amlin and Nephila. Munich Re Syndicate 457, which in the last years has provided capacity to a number of managing general agents (MGAs), has appointed Charlotte Macey as Head of Property (D&F). Although not technically ‘new’, several insurers (mostly MGAs) have secured additional capacity: Ki syndicate with Travelers, Aspen and Beazley, K2 with Hiscox, Artex with AmFirst Specialty, and Rokstone with Munich Re Syndicate.
Ian Bridge was appointed Active Underwriter of Dale syndicate in June. While Liberty Syndicate has lost some underwriters recently, the following markets have invested in new talent as they look for growth: Beazley Dale IQUW, Everest Syndicate, and MS Amlin GIC Syndicate. Several companies have also closed their regional offices with business transferring to London, such as Axis in Singapore, and Argenta in Australia.
Notable claims
In late June, Hurricane Beryl became the earliest Category 5 hurricane recorded. But at time of writing, the Atlantic hurricane season had been benign. However, because of high sea temperatures, 2024 is predicted to be an active season. Meanwhile, markets have commented that they are noticing a meaningful improvement in the management of food risks. This segment appears to be performing better, following some significant losses in recent years.
Geographic/sector differences
Australian domestic capacity has become more competitive, particularly for mid-size accounts, from new entrants in the local market. Consequently, rates have been softening, particularly on historically harder-to-place business, such as food risks and sawmills, where greater shares on accounts are being retained locally. Local insurers in New Zealand were continuing to push for rate in Q1 of 2024. This has now stabilised to a generally flat environment, although this remains less competitive than London. In the Caribbean, Miami markets are tending to push for more rate than in London, potentially as a result of greater exposure to Hurricane Beryl and general risk losses in their wider LatAm portfolios. The Singapore wholesale market stabilised towards the end of H1 2024, following accelerated softening versus London in the first months of the year.
New solutions
In addition to an increased appetite for facilities/lineslips, clients are increasingly exploring parametric solutions to complement or augment existing traditional cover, particularly for natural catastrophe perils.
Generally, most companies and syndicates have looked to deploy larger lines in the first half of 2024 and this abundance of capacity has naturally led to increased competition and favourable outcomes for insureds, with single-digit rate decreases becoming the norm for claims-free accounts.
Outlook
Expected range in rate changes for the next 6 months for claims-free portfolios
Rate reductions for clean business in the current market is now the norm, aside from accounts with significant natural catastrophe limits.
Expected capacity change in the next 6 months for claims-free portfolios
While we do not predict a significant increase in global property capacity, a modest increase in local/regional capacities could have a negative impact on accounts and/or order sizes into the London Market, as already seen in Australia.
Expected coverage change in the next 6 months for claims-free portfolios
Amid ongoing competition to write new business and retain existing business, we predict that additional ‘value added’ will come in the form of coverage enhancements and increased sublimits for critical coverages.
Fidelis has launched its Syndicate 3123, aiming to write ~USD 180m of business in H2 2024.
Emerging risks
As climate change has an increasing impact on loss frequency, insureds and brokers should become more proactive around risk analytics for secondary perils. We have seen more flood, hail, and wildfire events around the world, for example. Therefore, a preparedness and consideration for the inevitable questions around mitigation is paramount.
Renewal recommendations
It remains true that the investment made in presenting your risk to underwriters and building relationships with them (and your broker), will reap rewards. We work closely with our local retail teams to ensure that new or renewal submissions are of the highest calibre and the transparent tripartite relationships between our clients, our local teams and our marketplace ensure the best possible outcomes.
For further information, please visit the Lockton Specialty page, or contact:
Andrzej Danyluk
Head of International Property and Casualty
E: andrzej.danyluk@lockton.com