ED LOUTH: So we're entering the final quarter of the year, which has as many of you will know, is the busiest time of year for airline insurance, particularly with most of the major programs renewing. And really, we're seeing a continuation of the conditions from earlier in the year.
There continues to be new capacity entering the war market. We've seen another syndicate starting with effect from first of October. So there has been a flood of capacity in that area and that trend is continuing.
The all-risks is looking a bit more pressured. We've seen a lot of loss activity this year in a way that we haven't for a number of years, and we've seen very little capacity into that space.
There are a couple of MGAs who have started up, who are writing business around the fringes of the aviation world, but we haven't seen a big insurer start up, really, for three or four years now. So I think capacity is enough for now, But we don't have a kind of flood of new markets who are looking to enter aviation currently.
BECKY CHAPMAN: So how do you see this affecting pricing over the next quarter.
ED LOUTH: I think what we're anticipating is a firming of the all-risk market. We have seen some signs of that so far this year. I mean, the rate increases have been relatively modest. We're talking single-digit percentage increases in rates. I think there is an expectation that could possibly harden as we move through the final quarter.
And I think we're probably going to see that mostly on the bigger placements where the capacity is the tightest. So the big wide-bodied aircraft operators who need substantial liability limits are probably going to be the hardest placements, I would guess, in the final quarter.
On the other side of that, really, and as a counterbalance the war-- we are seeing softening. And again, we are seeing that trend accelerate. So at the start of the year, we were seeing single-digit rate reductions. I think we're now well into double-digit rate reduction territory for a lot of placements, so there is no sign of that trend coming to an end.
BECKY CHAPMAN: And do you see any changes to coverage or limits as we move into the last quarter?
ED LOUTH: So I think we have seen a bit of appetite from clients to buy more limit. So I think an extra $200 or $300 million at the top of the program. I think some people have taken a decision looks reasonable value currently, and I think we may see a few more clients opt to expand limits.
We haven't really seen any major changes in coverage, and I don't think we're anticipating any. There has been a move from some of the war insurers to tighten up the war exclusion clause. I would say, as Willis, on behalf of our clients, we're not very happy with the new version of the clause. And so I think we will be arguing strongly against accepting that on placements. But I don't really see that the market is in a strong enough position to enforce that currently.
BECKY CHAPMAN: And how about geopolitical aspects? Are you seeing the geopolitical landscape affecting the whole war insurance?
ED LOUTH: With the five years that we've had, I've given up trying to predict what the future may bring from a geopolitical standpoint. But we're in a turbulent world. There are active conflicts. There are flashpoints. There is antagonism between major powers in a way that I haven't really seen in my lifetime.
And I think the scary part is that we're one poor piece of judgment away from something fairly chaotic and terrible. So my optimistic hat is on, and I keep my fingers crossed that we get through to the end of the year without any further conflict or war. But we're here. We're prepared. We've had a lot of practice over the last four or five years. And if it happens, we'll be ready to support our clients in the way that they need it at the right time.
BECKY CHAPMAN: And do you have any further comments to finish off?
ED LOUTH: I wish a successful season's trading for all of Willis and all of our clients and look forward to the Christmas party.
BECKY CHAPMAN: Thank you, Ed.
ED LOUTH: Thank you.
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