Insurers are likely to take a more aggressive approach to loss affected or catastrophe exposed risks, as well as risks that lack adequate risk controls

Ahead of 1 January renewals, insurers are warning 2018 is likely to be challenging as speciality lines struggle in the rocky space between soft and hard markets.

Following hurricanes Harvey, Irma and Maria, price reductions of recent years have mostly ceased, and underwriters are seeking significant increases for catastrophe exposed accounts.

“Underwriting discipline has begun to return to the market, and for the first time in many years we are seeing (re)insurers turn down risks for which they have minimal appetite or that do not come with rate increases, says Miller Insurance head of specialty, Ken MacDonald.

Risk managers and insurance buyers should be prepared to provide insurers with quality risk data if they are to negotiate against blanket adjustments in rate.

“Yet, the market today is in no way comparable to the hard market that followed the World Trade Center terrorist attack in 2001. Capacity and competition remain plentiful, and while some (re)insurers are looking to apply blanket increases, many continue to take a pragmatic view and rate risks on their own merit,” he adds.

With catastrophe losses yet to be tallied, and with treaty reinsurance renewals on the horizon, it is too early to predict the outcome of changes in the market.

However, there is enough evidence to suggest that the environment will be more challenging for buyers in 2018 says MacDonald.

When clients come to renew, they will find a very different insurance market to that of 2016 and early 2017. Insurers are likely to take a more aggressive approach to loss affected or catastrophe exposed risks, as well as risks that lack adequate risk controls.

They are also likely to see insurers increase their focus on retentions, limits and cover as they seek to reduce exposures.

With this in mind, buyers should prepare themselves for a different kind of engagement with the insurance market.

Risk managers and insurance buyers should be prepared to provide insurers with quality risk data if they are to negotiate against blanket adjustments in rate.

 

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