LOUISE DORRIAN: Thanks for having us.
KIRSTEN MONAGHAN: It's been a really busy few months in our marketplace, so it's great to take some time out to chat about what's been happening.
Kim Richardson: No, I think that sounds great. There's kind of been a big change in market appetites and approaches of late, and it's really interesting to see how insurers are responding to new and emerging challenges.
KIRSTEN MONAGHAN: Definitely. And I think that gives us a good place to start our conversation, actually, as both the North American Property and Product Recall Markets have seen a return to soft market conditions recently. Kim and Louise, could you perhaps share with us how the capacity landscape is driving those increased market competitions?
KIM RICHARDSON: Thanks, Kirsten. In the London property market, there's little in the way of new new capacity. But the overcapacity we are seeing on placements, is coming from existing markets that are a bit more eager to deploy capacity than there have been in recent times. This is occurring both domestically and internationally.
And there is one common theme that we feel that is difficult for the smaller capacity providers, which is to move to write a bit more of a quota share basis and to write longer stretch primaries. So the markets are only giving short primaries or buffer layers are kind of being squeezed out of the programs.
KIRSTEN MONAGHAN: Louise, have you seen similar in the recall space as well?
LOUISE DORRIAN: Yeah. So for recall, we've seen an increased number of MGAs entering the market over the past couple of years, which has contributed to the incredibly competitive rating environment. It's possibly the softest that we've ever seen. This spans more than just the pricing and also includes the coverage and capacity. Many insurers are also now pushing to lead their placements and deploy additional capacity across multiple layers on the larger placements.
It's also worth noting that whilst we are in a soft market for recall, as a non-compulsory line of business, this is the perfect time for the new buyers or for existing clients to increase their limits and take advantage of low rates. The opposite is true in a hard market. This is when we tend to see clients start to non-renew or reduce their limit.
KIRSTEN MONAGHAN: Really interesting to hear the different complexities within your markets and really how these changes and strategic capacity play is driving the soft market conditions again. But we know that North American Casualty is really bucking the trend, and we're still experiencing hard market conditions. Sonja it must be quite a different landscape for you right now.
SONJA WILD: Very different landscape.
KIRSTEN MONAGHAN: So it'd be great to hear what's driving that. From your perspective, could you maybe touch on some of the capacity changes within the US Casualty market and how they're affecting market competition as well?
SONJA WILD: So we're seeing markets deploying less capacity overall and also attaching lower down in programs, whilst often wanting to balance out any anticipated volatility with additional ventilated lines higher in the tower. Essentially, in general, markets are being more selective and cautious, I would say, mostly focusing their participation on those tougher to place layers, layers where more managed lines can genuinely add value for clients.
And then on new entrants, I would say similar to the recall space, in that we're also seeing new entrants with MGAs who are looking to enter the market in cost effective and more specialized ways. But unlike in both North American Property and recall, I wouldn't say that this influx is driving competition in North American Casualty in the same way, if at all really.
KIRSTEN MONAGHAN: Yeah. Thanks, Sonja. So I noticed that both you and Louise touched on the existence of MGAs within your marketplaces. Obviously, the use of MGAs has been around for a long time, but their prominence really seems to have grown in recent years. Louise, do you see their involvement continuing?
LOUISE DORRIAN: Yeah. We've had a couple of MGAs in the recall market for several years now, with the addition of some new entrants in the past two years. We do expect this trend to continue for the foreseeable, but the additional capacity and willingness to write more complex risks is really driving the competition in our market meaning not only are they providing capacity and competitive terms for our clients, but they're also driving the market forwards.
SONJA WILD: I would agree for North American Casualty, strategically, they can add value to our placements by opening up valuable new capacity and providing stability to our insureds programs when they sit alongside the rest of the market. I do think it's worth noting that whilst new capacity is always welcome, I think there is a responsibility on the broking side to be continuously evaluating the stability and staying power of these MGAs, as well as looking at their claims, handling and client servicing capabilities when we're considering their participation on programs.
KIRSTEN MONAGHAN: Great point. And the use of MGAs has really shifted over recent times. There seems to be quite a different outlook on their contributions now. But for different reasons, you all seem to be in quite a complex and evolving marketplace, and providing the right results for our clients can sometimes be quite challenging. So if you were to think of maybe one piece of advice or approach for our clients really to get the best results out of their renewals or new placements, what would that be? Kim, maybe I can come to you on that first.
KIM RICHARDSON: Of course. So I think my main advice to clients on a property perspective would be providing complete and accurate data. So the market and us internally uses data to calculate premiums, their limits and capacity using models, which take into account the addresses, the values and the cope information, so ensuring that all locations in a schedule have complete addresses, the construction, occupancy, year built, floor area and number of stories really gives the market a complete view of the risk.
And many models are also able to take extra mitigation factors into consideration, such as equipment bracing and building quality. So providing a full and accurate view of the portfolio helps clients to get the best out of placements. We also have our own modeling capabilities, which helps us drive competitive options and terms and conditions for our clients.
KIRSTEN MONAGHAN: It's a great option to have. So I couldn't agree more. And using data and analytics to really drive results. Louise and Sonja, would be really great to hear your thoughts on this as well.
LOUISE DORRIAN: I really agree on providing complete and accurate data as well Kim. My advice really would be to ensure transparency in terms of data sharing, including any details of any prior incidents that the clients may have had, and a full overview of products to be insured, taking away the need for potential subjectivities later on in the process.
It's also really important to engage with us early, allowing plenty of time ahead of renewal dates. This ensures that we've got adequate time to start reviewing submissions in full and discussing with markets in detail.
SONJA WILD: And then in North American Casualty, we're definitely seeing a growing trend towards the development of specialized solutions and facilities in response to the harder market conditions. Each year we're requiring more layers and more documentation to complete towers. They're becoming increasingly fragmented, so the entire process has become more demanding.
Where previously six carriers could provide between 25 and 50 million stretches of capacity to complete a tower, it can now take triple that time. And as a result, as we're nearing inception dates, we're seeing that clients can be at risk of losing leverage. So the advice would be for clients to really capitalize on these solutions and facilities and what they offer.
So often more streamlined, efficient access to coverage, improved terms and tailored solutions in more distressed classes and attachment points. The responsibility, of course, lies with the broker to guide clients, present these solutions, explain them thoroughly, and recommend options which best suit their needs. But all of this really underscores the importance of early engagement and transparency, which Kim and Louise both touched on.
Starting the submission process in good time, having contingency plans and also strategically using facilities and solutions, I think can help clients stay in command and keep hold of the reins to secure the best possible outcome for their program, year on year.
KIRSTEN MONAGHAN: Thanks, Sonja. I completely agree. Staying in control is really important, I think, especially when you're up against tight deadlines. And there's some really great takeaway messages then insights there. And obviously, as you pointed out, Sonja, we have a great responsibility as brokers to guide and facilitate these solutions. Any marketing efforts and also access to the marketplace to really drive the best results for our clients.
And Kim, Louise, Sonja, thank you for your contribution on this episode of the marketplace insights podcast. See you in the next one.
NARRATOR: Thank you for joining this WTW podcast featuring our latest global market commentary. WTW offers insurance-related services through its appropriately licensed and authorized companies in each country in which WTW operates. For further authorization and regulatory details about our WTW legal entities operating in your country, please refer to our WTW website.
It is a regulatory requirement for us to consider our local licensing requirements. The information given in this podcast is believed to be accurate at the time of publication. This information may have subsequently changed or have been superseded, and should not be relied upon to be accurate or suitable after this date.
This podcast offers a general overview of its subject matter. It does not necessarily address every aspect of its subject or every product available in the market. And we disclaimer all liability to the fullest extent permitted by law. It is not intended to be, and should not be used to replace specific advice relating to individual situations, and we do not offer and this should not be seen as legal, accounting, or tax advice.
If you do intend to take any action or make any decision on the basis of the content of this podcast, you should first seek specific advice from an appropriate professional. Some of the information in this podcast may be compiled from third party sources we consider to be reliable. However, we do not guarantee and are not responsible for the accuracy of such. The views expressed are not necessarily those of WTW. Copyright WTW 2025, all rights reserved.
