11 March 2024
by
WTW
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In this update we assess the insurance market across allmajor lines of business in Europe, with a detailed look at thecurrent European commercial lines insurance market in Q42023.
Executive summary
In this update we analyse the current European commercial linesinsurance market based on the experiences of our WTW clients.
In addition to market overviews, our report also provides adetailed trend analysis by country for each of these sectors. Thisinformation is particularly beneficial for industry professionalslooking to stay ahead in the ever-evolving insurance landscape.
Rating trends are for guidance only and rates achieved willdepend on individual circ*mstances. All figures are comparedagainst our Q3 2023 remarks.
The European commercial lines business insurance market hasremained stable throughout the fourth quarter, and is expected tocontinue as such in 2024. Despite this, the reinsurance marketshould continue to be monitored as reinsurance renewals impact theoutlook for both international and local insurance companies.
We are in what we would term a stable, hardenedmarket or two-tiered market.
The European commercial lines business insurance markethas remained stable throughout the fourth quarter, and is expectedto continue as such in 2024.
This means that placements with a focused broking strategy, goodloss ratios, and/or good quality data, can be managed as expected.However, there are other risks pertaining to specific industriesthat can be challenging to place.
For most lines, there is enough capacity in the continentalEuropean markets for our broking teams to place their risks, thanksto a mix of local or European well-established insurers and newinternational players.
A spotlight on the markets
Property
The recovery of the property market means that focus is now backon growth with:
- Mid-market as a key growth area and limited natural catastropheexposure.
- The large and complex market's capacity is stillchallenging, especially for certain volatile risks or sectors.Areas to note: catastrophe exposures (not only in the US but alsoin Europe), supply chain, Strikes, Riot and Civil Commotions (SRCC)considering the geopolitical situation and loss leading accounts ingeneral.
- Well managed risks with good loss ratios can be wellreceived.
Casualty
The casualty market has returned to profit due to the positiveeffects of remediation. Maintenance of underwriting discipline andrisk selection has led to consistent positive underwriting results.Increasing competition with insurers' focus on top-line growth,is leading to downward pressure on rates, with some insured'sexperiencing rate reductions.
However, for difficult sectors, especially with US exposures andloss impacted renewals, capacity remains limited. Insurers areshowing continued concern towards both economic and socialinflation. These trends expected to continue into 2024.
Financial, Professional and Executive Risks
The directors' and officers' market has continued tosoften, and we see no signs of stabilization yet. There is enoughcapacity in the Western Europe market where several insurers arelooking for growth. The financial institutions market is stablealthough rates are beginning to decrease. Additionally, the cybermarket is softening which we see is a pattern throughout theregion.
Construction
There is an expected deceleration of growth in the constructionindustry due to increases in the cost of materials and shortages inthe specialized labor force. The residential sector remains weak,impacted by high interest rates and low demand. In the publicsector however, investments into energy, infrastructure andtechnology remain key market drivers.
There continues to be signs of stabilization for domestic placedprograms and projects where we expect stagnant or reduced rates.However, the large and complex market is experiencing higher ratesin the low double digits, particularly where there is a need foradditional reinsurance or those with natural catastrophe andsecondary peril exposure.
Trade credit
Following a period of low claims, insurers expect a gradualincrease in bankruptcies towards more normalized levels. While thefrequency of claims have been increasing in 2023 and are now closeto pre-COVID levels, severity of claims remain below average, andinsurers continue to enjoy low loss ratios.
Download our report and gain insights into the currentconditions and short-term perspectives for all the key insurancemarkets including: property, casualty, financial, professional andexecutive risks and trade credit risks; and a trend analysis bycountry for each market.
The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circ*mstances.
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