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Global Marketplace Insights – Global Broking Q1 2024

Market insights

April 16, 2024

Hugo Wegbrans, Global Head of Broking and Alastair Swift, Head of CRB Global Lines of Business & CEO of Willis Limited, discuss the latest insurance marketplace trends across the regions.
Q1 2024 Global Marketplace Insights

Hear from our global experts and learn more about the latest insurance marketplace trends


Global Marketplace Insights – Global Broking Q1 2024

Welcome to the first quarterly video of 2024.

Apart from the video that Swifty and I are recording for you, again this quarter will be a full update on every geography and line of business as you're used to from us.

Before getting into sort of 2024, a little looking back on 2023, we did our quarterly videos and every time we talked around remediation insurers looking at the results, focus on growth and as the sort of the annual results come in, they've done pretty well.

\ Did they?

Yes, certainly their remediation may have worked for them.

I'm not so quite so sure if you're a client how you'd be feeling.

But at the end of the day, if you look at where the combined ratios have been for the vast majority of insurers and reinsurers, 2023 seems to have been a pretty phenomenal year with some record profits out there.

Yes. And even I mean at the end of 2022 we're looking at reinsurance markets not being there.

They seem to have done it a bit quicker than the insurance market is looking at the results in 2023 they sort of dropped immediately way below the 100%.

Absolutely. And if you look at the action they took with the insurers where they pushed larger retentions on to the insurers on the front end of the business, moved their reinsurance pricing up or or capacity up slightly higher up people's programs.

That's obviously worked in 23 and you know with no major, major catastrophe versus, I'm going to say a plethora of smaller cats that's obviously played into the reinsurers hands significantly and driven some pretty good profits at the end of the day.

So overall again maybe not for clients but a good year for insurers to get the results in, in a way where they where they wanted them.

So generally we would say getting into 2024, the trading relationship for the trading position of clients is, is in a good spot, is it you?

You'd hope so, right?

You would hope that the market now can react having had you know frankly a couple of very good years that they can react and start doing things that are going to be beneficial to you know, to our client base at the end of the day.

And I think you know we're starting to see that show up in the market and the market cycles and some more competition and into some areas of the market than maybe we've been used to over the last couple of years.

Certainly feels as though insurers are in growth mode.

You know certainly from my perspective this year, you know having met quite a lot of insurers through the first quarter, I can only think of one who hasn't said to me that they're in growth mode.

So I think you know they'll be looking and they'll be looking to chase some premium dollars which is should normally beneficial to our client base.

Well the global marketplace is just in a in a good spot for clients at this point in time.

Looking at a little background on cat, you already mentioned a little bit or more frequency of that.

I mean 2023 if you add up the numbers, there's still 100 billion of cat losses which is I mean nothing shabby, I would say.

It’s still in the top ten of the most costliest years, but it has been a number of smaller ones rather than a real big.

I mean, we had no one in Japan. We had no real big sort of economic loss.

I mean the earthquake in Turkey and Syria was bad enough as it was but from an insurance side it was a not a limited event but nothing like a major catastrophe.

Yes, we've seen over a couple of last couple of years.

I think that's right.

And that I mean as a result of that there's been a sort of slight miss factor for some insurers.

From that perspective, you know did you have a lot of or a large book in Italy that got hit by the storms there. You know that's the type of it was far more focused from the point of view of the losses.

So not everybody experienced that 100 billion to the same extent that they might have done if it had been some very significant catastrophe in one area.

But I think what is fair to say is that you know climate is obviously having an effect on the number and frequency of these catastrophes that are happening.

And it's something that we've got to be aware of whether it be from a wildfire perspective, whether it be from a you know name storm perspective.

These are things that just seem to be happening with more frequency but not necessarily unexpected one.

I mean it's like hail, hail storms in in in Italy with with so hail on tennis balls it's been Bush fires been droughts been all kinds in all around the globe, all around the globe exactly.

So one other thing I want you to comment on for our audience is a lot that that we get back or I get back from insurers is their caution on U.S. casualty and especially on the primary area.

Any comments on that?

I mean certainly it seems as though claims inflation is coming through you know pretty hard in, in the U.S. I mean there was obviously a backlog in the courts, you know during the COVID time that seems to have come through, the settlements seem to be coming through and at a slightly inflated level to where they've been in the past.

And so I think we're seeing now a reaction to that from insurers and reinsurers where you know they're looking and they are reacting to these increased payouts that are happening. And you know, it looks as though that type of claims inflation is here to stay.

So, you know, we probably should expect that that pricing that there'll be more discipline around what is happening from a pricing perspective in the U.S. casualty market and that people will look to you know, measure that against what happens on those claims.

It's not only the claims it's also like the nuclear verdicts getting more and more.

The numbers are massive on that side especially I mean it's not only motor but in motor there's a there are massive couple of ones out there that that cost a lot of money to insurers that need to be priced in.

So going forward I mean the thing we see so a bit more relaxing market probably the sort of the real big limit buyers still are in a in a tough place, it's still not a soft market where pricing really comes down.

So when you've got big limits it's still quite difficult to get to do sort of multi billion numbers.

The one other thing and more, maybe more in the specialty area where is your area is so anything with geopolitics, terrorism, the war, any comments on those, it's that doesn't relax, does it?

No, unfortunately anything I would say, you know, any aggregated peril or peril that can aggregate, there seems to still be pressure on because there hasn't been this massive influx of capital into the insurance market.

And one of those areas unfortunately is political violence and terrorism.

And obviously we're seeing a far more heightened risk in certain areas of the world unfortunately as a result of some of the, you know, some of some of the sort of political situations that that are out there.

And as a result of that, that is putting pressure on that marketplace.

And it is still somewhere where not only are we seeing pricing increase but we're also seeing capacity reduction.

And you know people are trying to derisk in certain areas of the world, which is unfortunate because actually what you would hope the insurance market would be doing is leaning in and you know clients I think understand if the exposure base changes in some way they will, they will end up having a corresponding change in their premium.

What they don't like is some of the stuff that we're seeing at the moment, which is where people are actually looking to push price and look at reducing their capacity and then that creates gaps in people's programs.

So you know one of the things that that's very important clients do if they have big exposures in some of these areas of the world is get out there early.

You know the earlier you can get into the market, the longer people have to actually negotiate and secure the limit, the better.

We talked throughout 2023 a bit around the D&O markets.

That has come down drastically over the last 18 to 24 months within the financial lines, we've seen, we're starting to see something similar on cyber.

So it's sort of it's not off the edge, but it's slow, slowly creeping down.

So how do you look at that?

Is that going to be the same way as D&O or is there or there's some ransomware claims out there?

So how do you see the sort of the immediate future on that 1?

So it's interesting. We've just done our D&O survey and you know we have clients, lots of feedback from clients, lots of feedback from markets and interestingly it doesn't look like the D&O market is going to stop reducing anytime soon and maybe more moderated, but certainly you know it looks like that pressure is going to continue which should be beneficial from a client perspective.

Cyber is again very interesting. It went up very rapidly. There was a lot of uncertainty about it.

A lot of people talk about systemic risk and what was happening from that perspective.

Now we've started to see, you know, markets, I'm going to say potentially take themselves out of the equation because they're putting war exclusions on policies and that means that business is moving around.

But there seems to be enough limit for clients to buy.

And you know that the claims profile seems to have changed slightly as well.

And what we've started to see is that certain clients, they may be getting ransomware losses, but they may not actually be looking to pay those ransomware losses.

So the insurer may hold a reserve but ultimately may not pay something.

And so at the moment there are some quite significant ransomware reserves being held by insurers, but they haven't paid them as yet.

So I think a lot of it will depend on that side of things. Funny enough, you know you switch that to the aviation market depending on what happens with the aviation losses and the settlements that will come out of the courts later on this year that could have an impact on the market pricing as well.

And I think you know cyber is one of those areas that because of its size as a marketplace, it has the ability to be very volatile based on the losses that are actually paid, but also the losses that are reserved.

So it's a little bit of a cross point where we are in the market, absolutely.

So depending on when these losses become more clear, it's very depending on sort of which way it goes, where the, where the market actually is going.

But generally we would say is that it's getting a bit more relaxed because we already saw a little bit in the fourth quarter.

And again if you take the sort of the macroeconomics, I mean there's not the massive inflation anymore where there is people are not remediating the books anymore.

Everyone is making sort of almost everyone is making money, they're happy with where their books are and everyone's got growth ambitions.

That sort of sounds like a perfect combination of a good place for a client to be.

I think you're spot on Hugo.

I think the most interesting thing for clients is going to be also to see how this year develops, right, because it wouldn't take a lot I think to swing the market back into a different direction of travel from where it is at the moment.

Well, I actually mean it moving from where I think it's softening at the moment to potentially hardening a little bit if there was some major nat cats in in you know, through the summer.

But I think if barring that, I think we're going to see the market become more and more and more competitive and beneficial to clients as the year goes on as insurers look to achieve these growth targets that they've got.

So getting out there thinking around how you market your program, how you get it into the marketplace at the right time I think is going to be vital for our clients to you know to achieve the best results.

So I mean basically the general advice we don't put out to clients is like sort of understand your position, talk to your WTW contact on where the market is on specific lines of business in your industry or sort of your buying behaviour and see how that best fits into the market as we move into 2024 which is we're going to provide some change to get into client.


So with that, any other final thoughts on you on where we're going to advise clients in a way or I mean it is getting into a better spot which we haven't been over the last couple of years. So again, being close to us, it's basically our main advantage.

I think you know as we've said in some of these videos before, you know, making sure you're adjusting your values to reflect what's happening from an inflationary perspective, although not to the same degree as it was in the past, it's still there. I think clients need to really look hard at that.

The more information we can get frankly the better normally from the point of view of how we're presenting at risk and use the modelling capability we've got as a business from a risk and analytics perspective to really inform what you're buying as a client you know against what is available in the market.

And I think it's vital that you know clients really consider that from the point of view of you know their own balance sheet, but also what the appropriate limits are for them to buy because there is a trade off between different lines of insurance and different risks that you that you need to mitigate.

Well, WTW has all the tools to actually help clients absolutely and actually doing that.

So that concludes our sort of quarterly view at the start of 2024, the first quarter of 2024.

Again there's videos of different lines of business and different geographies for you to sort of zoom in more on your position.

And Swifty and I are looking forward to see you at the end of the next quarter.


Global Head of Broking, WTW

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