Trade credit joins cyber as a challenging market – Aon

Cyber again led the way with the broker citing a more than 30% rise in keeping with the figure in its Q1 calculations.

Capacity for cyber was constrained, the firm detailed, with geopolitical events in Eastern Europe creating additional uncertainty and new complexity in an already challenged market.

Along with continued rate increases, there has been a further tightening of coverage related to systemic risk and war exclusions, Aon added. It forecast that the challenging market would continue.

Trade credit had been softening in Aon’s first market dynamics outlook of the year.

However, this reversed to prices going up by 11% to 30% in the second quarter according to the latest update.

The switch was driven by ongoing supply chain challenges, inflationary pressures and events in Eastern Europe, Aon explained saying the market would remain challenging.

The firm predicted that demand for trade credit cover would continue to increase, even as appetite is expected to contract for risks in specific countries.

Property

The Global Market Insights Report also showed that in the UK property lines, automobile, casualty/liability and employers’ liability all posted 1% to 10% price rises in the second quarter. This was identical to the hikes seen in Q1.

In property Aon flagged that the rate of increase in pricing had “decelerated” particularly where significant price increases had been imposed during recent renewals.

It noted that market competition remained healthy with insurers focused on growth but that challenges remained for specific industry sectors – such as food, pulp and paper, and heavy industry – as well as loss-impacted risks.

Looking ahead it forecast that market conditions would continue to stabilise in the third quarter though inflation would put pressure on pricing.

Appetite

The automobile market was driven by healthy competition and appetite, Aon said, with market conditions remaining stable and modestly favourable.

The casualty/liability uptick was primarily due to the inflationary environment while employers’ liability saw market competition dampening increases.

On employers’ liability Aon stated that evidence of a clear risk management strategy remained key to obtaining superior results.

“Inflationary pressures and their potential impact on claims costs will be a key concern for insurers,” Aon set out suggesting the market would continue to be competitive.

D&O

D&O was the standout section where prices had dropped.

Capacity was abundant, underwriters demonstrated greater flexibility and rate decreases were common, Aon listed.

It highlighted though that the rate decreases in Q2 were not at the same pace as they climbed during the hard market cycle but did not provide a precise figure.

“Price reductions were stimulated by increased competition, both in terms of new capacity – from insurers and MGAs – and a broadening of appetite from existing insurers, many of whom had reduced or completely withdrawn capacity during the pandemic,” the authors wrote.

Concluding: “Increased competition is expected to lead to a more favourable pricing and underwriting environment for insureds.”

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