0:19
I'm excited to be joined by my colleagues to share latest trends and some key topics we are experiencing in the international marketplace.
0:29
We are fortunate as our teams are located in all the key marketplaces, Miami, Bermuda, London, Singapore, Hong Kong, Shanghai, Dubai amongst others.
0:42
We trade across 400 markets 24 hours a day.
0:46
So we are uniquely placed to anticipate market movement and some key topics for you to keep front of mind.
0:55
In North American property, we're a lot more optimistic against the 2024 renewals for our clients.
1:01
The 1/1 treaty reinsurance renewals have been a lot more measured than the prior year and our underwriters are describing the 1/1 renewals as more orderly.
1:10
We've seen over $100 billion of global insurance claims in 2023 and more specifically nearly 70 billion of U.S. non-cat losses mainly in the convective storm space.
1:21
The rating environment we've been experiencing over the past five years has now subdued. The first few months of the year have seen many of our London markets advising us that they have increased capacity and appetite for the coming year.
1:35
In addition, we have two new entrants in the North American property space, Westfield and Argenta.
1:41
Between the two, we see substantial targets for their 2024 GWB, a combined number of nearly $140 million.
1:49
Initial indications are showing that the market appetite for growth is strong and we've seen our core clients start to receive a more measured approach to their renewals.
1:59
The international market is in a more stable phase after a sustained period of free underwriting. Rates are now seen as technically adequate and this is leading to more stable renewals.
2:11
Rates are now in the region of between flat to low single digits.
2:15
We are seeing occasional rate reductions as well.
2:19
This is on risk with no catastrophe exposure and risks that are loss free as well.
2:25
Capacity is for the most part stable.
2:27
There are a handful of new entrants in the market but not very many for the insurers that are in the market, there is a mandate to grow.
2:35
So we are seeing insurers look at writing things differently
2:40
Markets that have written traditional quote share placements are looking to write primaries, excess or loss. Markets that haven't written certain occupancies like food are looking to come in as well on lets say on an excess of loss basis.
2:56
We're also seeing increased lines where markets like a particular risk or an occupancy.
3:05
All of this is leading to some competitive tension in the market, which is contributing to keeping the rates where they are.
3:13
With regards to terms and conditions, we're not seeing the same relief as we are in pricing.
3:19
The terms and conditions remain under scrutiny. Valuations are still being reviewed. 3:24
Even though inflation has stabilized. There is a requirement to maintain the discipline of ensuring that the correct values are being declared.
3:33
Our clients are required to either have done a valuation in the last three to five years or provide a methodology in which values have been declared. And in the absence of a recent valuation or a methodology, average clauses will apply and other value limiting clauses apply also. Contingent business interruption is another area that's under scrutiny at the moment.
3:59
This is driven mainly by a lot of a Nat-Cat activity in areas that haven't experienced Nat-Cat activity in the past. The geopolitical events that are taking place in some parts of the world and sustained pressure on supply chains.
4:16
So we're seeing insurers needing to understand the full aggregated exposure in more detail beyond the specific insured. Deductibles, retention continue to be reviewed to make sure that they're adequate for the risk and away from the attritional losses.
4:39
And the conditions that came in the last couple of years., the exclusions, the cyber exclusions, communicable diseases, Russia, Ukraine, Belarus, those remain fully enforced and we expect that to continue, we don't see any change on that front.
4:53
The umbrella and excess liability rates have continued to stabilise over recent months remaining at 5 to 10% across the board.
5:01
However, the lack of competition in the lead umbrella space continues to weigh these results.
5:07
Only recently our insurers gaining clarity on loss trends for accident years 2015 to 2019 and many are communicating concerns for under reserving.
5:18
In this update I wanted to cover nuclear verdicts and an emerging risk within the North American casualty market.
5:25
Commercial auto and trucking remain to be some of the most troubled lines within the market, with large truck verdicts increasing 300% over the last seven years.
5:35
Media nuclear verdicts against corporate defendants rose from $21.1 million in 2020 to $41.1 million in 2022, a huge increase of 95%.
5:48
Court closures due to COVID have been a significant factor for not only claims inflation, but also social inflation.
5:55
Finally, an area we are starting to see more and more carriers ask about is biometric data.
6:01
The Biometric Information Privacy Act, BIPA continues to stand as the most protective biometric privacy law in the U.S., which is currently only in Illinois.
6:10
However, this is evolving with 13 other states looking to implement similar laws over the coming year.
6:18
The casualty market is in an interesting place right now.
6:21
Whilst treaty rates for casualty insurers edged up in January after a sustained period of hardening, the casualty market is showing continued signs of stabilizing.
6:32
On the ground, there is clearly strong competition for well managed business.
6:36
That said, underwriting discipline remains in situ for difficult sector and exposure profiles.
6:44
Insurer focus has shifted from fixing the profitability of their portfolio to new growth plans and as such the trend of reducing capacity has stopped and some carriers are looking to increase their participation on programs with a view to increasing their income organically on existing business.
7:04
In spite of daily reports coming in of strong 2023 results and improving loss ratios, the market has not seen an influx of new capacity for a while.
7:15
Now, there is a new entrant looming on the horizon, but any injection of new capacity is countered by the recent news that we are hearing that one carrier is currently looking to exit the casualty space entirely.
7:28
So whilst many of the signs are positive, the mood is tempered at the moment, driven in part by a degree of wariness about the impact of social inflation and the ever- increasing scale of nuclear wars arising out of the U.S., the fallout of which is affecting internationally domicile accounts with even the slightest of U.S. exposure.
7:50
So in summary, increases are seemingly more limited and reductions reappearing due to enhanced competition for new business as insurers return to profit and focus on top line growth, a trend that is expected to accelerate throughout 2024.
8:09
Previously seen as a luxury or nice to have product recall, insurance is now more relevant than ever.
8:18
Within the automotive and consumer products sector, more complex products, enhanced regulatory pressure and severe contractual obligations leave manufacturers more exposed.
8:26
The consequence of a single defective product can have global implications and the cost of repairing or replacing these products continues to rise further.
8:36
The annual rate of UK food and non- alcoholic beverage inflation increased to just over 19% early last year, its fastest pace for over 40 years.
8:46
In addition to this stringent regulation, complex supply chains and the growth of alternative foods have all increased the frequency and severity of product recalls.
8:58
In an industry where trust drives consumer preference, a broadly publicised recall can have an adverse impact on a company's reputation, affecting sales during and long after a recall has been resolved.
9:12
To respond to these changes, the market remains intent on providing solutions that address the emerging needs of clients with new coverages available for alternative foods including vegan and free from products or risks of cyber and software within the automotive sector.
9:29
Importantly, we are seeing an increase in casualty carriers looking to withdraw capacity for equal coverage, whether this be on a standalone basis or as a sub limit within broader casualty programmes.
9:47
Where many insurers still believe there are growth opportunities as manufacturing companies continue to globalize and contractual demands for coverage strengthens, we have witnessed new entrants into the standalone recall market restricting the more established markets’ ability to push rates despite an intent to do so.
10:02
We project this trend to continue and expect the standalone market to take a principal role in supporting our clients going forward.
10:11
The global environmental insurance market is very buoyant at the moment and rates are fairly stable compared to other lines of business.
10:19
Environmental insurance is an increasingly important consideration for risk managers and our team at WTW are really well placed to provide a full suite of solutions.
10:29
Last year we saw a significant growth and this is come from a broad range of clients including M&A transactions across Europe, global manufacturing clients, large infrastructure projects all around the world and utility companies within the UK.
10:44
What we're seeing is that the general public as well as shareholders are less willing to accept poor environmental performance and it's shown that there's a direct correlation between share price and well managed environmental exposures.
10:57
What we are seeing are claims arising from some really interesting events such as electric cars setting on fire within multi-storey car parks, ethylene oxide emissions from medical sterilization companies, and renewable energy projects destroying protected wetlands.
11:14
Emerging risks that the EIL market is leading on include biodiversity damage and carbon capture losses.
11:21
PFAS is a topic everyone is mulling over, but until reliable quantitative risk assessments of a broad range of these PFAS chemicals become a possible, it's very difficult to obtain historical PFAS coverage.
11:37
That being said, we are able to obtain sudden accidental coverage for PFAS chemicals, and this is especially useful where there's exclusions in place on general liability programs.
11:49
Biodiversity risks will become an increasingly important consideration for our clients as legislation develops to ensure they're managing their impacts on biodiversity and also how their business can be exposed to biodiversity losses.
12:03
Environmental policies already provide coverage for biodiversity damage arising from our clients’ operations, so it's really important to discuss the availability of environmental policies to all of our clients wherever possible.
