January 6, 2023
What can we expect in the first quarter of 2023?
The insurance industry has demonstrated incredible resilience and adaptability over previous years. With ongoing challenges such as inflation, rising interest rates and increased competition, we analyse upcoming trends in the PI market for 2023.
- Renewals are going to be tougher to place with the insured inviting extra competition to the market. Most insureds are approaching brokers to see if they can squeeze savings on the heightened premiums paid for the previous 3 years. It is vital that your Placing/London market broker is negotiating with the relevant insurers to ensure savings, and managing renewal rates for your client. Is your broker working for you, your client, or themselves?
- In Fire Safety, insurers are singing from the same hymn sheet. Typically the IUA Cyber Clause is being used, and some insurers are offering slightly enhanced cover. Is your broker well positioned to get options for your client, as well as being able to offer a technical understanding of the coverage?
- As always, capacity is refreshed on 01/01 for most insurers. Business plans are set in terms of growth, renewal rates, appetite, and changes to their coverage/additional endorsements. Brokers who are proactive in their approach will have the upper hand due to strong relationships with their underwriters.
- As previously mentioned, competition is expected at renewal. We are not suggesting moving renewals to make savings, but it is important that your broker is well-connected and is testing the market at renewal for you. Insurers have new growth strategies to enable them to hit high targets for 2023. It is essential that your broker can identify new entries to the market and protect you from losing clients due to heightened competition.
- Technical tactics in the markets are shifting, enhanced coverage is being offered, underwriters deploying larger line sizes, endorsements are being widened, and limit basis may be enhanced. We will see more favourable renewal terms offered for insureds from a coverage perspective. Does your broker offer advice and negotiate terms at renewal based on the market's reaction?
So in conclusion, the PI market is going to be challenging for brokers, wholesalers, and underwriters. Savings and rate reductions are to be expected for the insured. Things are likely to shift by around 10-15%, and clients paying over the odds may see more. However, provided revenues are up, renewal offering upon expiry is a good result.
Fire safety, cladding, structural, steel, groundwork and civil engineers, will see similar terms and cover at renewal for the first quarter. Throughout 2023 changes will occur for Managing General Agents as they have to react to renewed binders. We are going to be in the middle of a changing and complex market.
Regional brokers, what can you do?
- Speak with your wholesaler, ask for their advice, and plan renewal strategies.
- Ensure detailed submissions and presentations are prepared.
- Ask yourself, is your Placing/London market broker working with your client's best interest at heart?
We are here to help. As an owner-managed independent Lloyd’s Broker with offices in London, Europe, and North America, we strive to create value for your insured clients by adding an entrepreneurial flair. We will happily discuss how we can offer a second opinion on any new business or existing renewals.
Written by Macauley Geddes
Cert CII, Head of International Wholesale