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International liability: The end of the hard market?

Energy Market Review 2024

By Mike Newsom-Davis | April 16, 2024

In this article from the 2024 Energy Market Review, we explore the energy liability market trends: treaty renewals, profitability, social inflation, and much more.
Climate|ESG and Sustainability

Our 2024 Review contains a certain canine and zoological theme, as we seek to analyze the current status of the energy liability market. As always, it is helpful to first consider the key drivers for market conditions. These are, most particularly, treaty renewal costs, market profitability and available capacity.

2024 treaty renewals: A shaggy dog story?

There was significant doom-saying prior to the 1 January 2024 liability treaty renewal season, with a number of treaty reinsurers talking-up the market.

Much stemmed from the same very valid concerns facing direct insurers, namely social inflation; adequacy of reserving and the ever-increasing claims stemming from the U.S., most particularly in respect of U.S. auto and workers, comp.

One particularly interesting feature was the emergence of U.S. claims from books of ostensibly international treaty business. A case in point being the successful class action claim relating to the collapse of a condominium in Miami in June 2021 for which the international security company responsible for alleged negligence of the guard, was found liable for almost half of the $1 billion claim. This has prompted many reinsurers to analyze their books more closely. In particular, one reinsurer, who was hit three ways on this loss (via their direct, facultative and treaty participations) has cut back its overall maximum direct liability line size as a result.

Despite worst fears, treaty negotiations were conducted in an orderly fashion with adequate capacity and no major changes to conditions or retention levels. Pricing was on average higher than for the property treaty renewals, with risk-adjusted rate increases for liability treaties being in the mid-single digit range.

Market profitability: The patient is recovering well...

The Lloyd’s of London financial results are a good barometer of the overall health of the various lines of Insurance business, more broadly. In our 2023 energy market review update we noted that for the first time in eight years, casualty as a class finally returned to an underwriting profit.

To read more, please download the full article, below.

Title File Type File Size
International liability: The end of the hard market? PDF .4 MB

Global Head of Liability, Natural Resources Global Line of Business, WTW


Chairman of Global Natural Resources

Marie Reiter
Head of Global Broking Strategy, Natural Resources
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