Continental Europe Pricing Q4 2022

Cyber insurance pricing moderates

Insurance pricing in the fourth quarter in Continental Europe (CE) increased 6%, the same rate of increase as in the prior three quarters.

Property insurance pricing rates in CE rose 7%, compared to 5% in the prior quarter.

• Hurricane Ian and other catastrophe losses created uncertainty around capacity and put upward pressure on CAT pricing.
• The inflationary environment also drove property pricing increases, especially where asset values were deemed inadequate.
• Terms and conditions and capacity continued to be bifurcated in areas including CAT-exposed and non-CAT-exposed; loss-hit and loss-free; and high hazard and low hazard.
• Insurers continued to show discipline around terms and conditions including deductibles, non-physical damage, cyber, and communicable disease exclusions, as well as territorial exclusions for Russia, Belarus, and Ukraine.
• Contingent business interruption (CBI) extensions were under scrutiny as supply chain disruption, higher energy costs, and labor shortages continued to drive claim costs higher.

Casualty insurance pricing increased 6% in the fourth quarter, compared to 7% in the prior quarter, marking the fourteenth consecutive quarter of increase.

• The reduction in capacity from key primary markets continued.
• Markets increased pricing for risks with US exposure, for complex industries, and where current pricing was considered inadequate.
• Insurers continued to express concerns regarding social and general inflation on US auto liability exposures.
• Clients with large US auto fleets continued to see significant pricing increases, as well as increases in attachment points for US auto excess coverage. 

Financial and professional lines pricing rose 2%, compared to 6% in the prior quarter.

• D&O liability pricing was stable, with some reductions due to increased competition from insurers, entrance of additional capacity, and increased appetite to write more business given the slowdown in IPO and special purpose acquisition companies (SPAC) deals.
  • Underwriters continued to increase focus on environmental, social, and governance (ESG) issues.
• The FI space was generally stable, with some reductions and low single-digit increases depending on risk profile and loss history.
• Professional indemnity and crime coverage renewal terms began to stabilize.

Cyber insurance pricing increases moderated to 13%, as new capacity entered the market.

• Factors driving cyber pricing included fewer claims around privacy in Europe, a decrease in ransomware claims frequency and severity since the second half of 2021, insurers looking to maintain share and grow their cyber business in 2023, and new capacity entering the market.
• Retentions tended to be stable in the quarter.
  • Good risk profiles generated appetite from insurers, leading to increased capacity and the removal of restrictions on ransomware.