UK Pricing Q4 2022

Financial and professional lines decline, cyber pricing moderates

Insurance pricing in the UK increased 4% in the fourth quarter, compared to 7% in the third quarter.

Property insurance pricing increased 6%, the same as in the prior quarter.

• Property insurance pricing continued to plateau, making a somewhat less volatile environment for clients.
• The market was competitive for low- to medium-hazard industries, but pricing challenges remained for those with major losses or a challenging occupancy or process, such as food production, warehousing, or waste recycling.
• Insurers focused on the inflationary environment around claims, including by increasing pricing if exposure bases were not correctly reviewed.

Casualty insurance pricing increased 4%, the same as in the prior two quarters.

• There was a slight reduction in the pressure to increase pricing in the quarter, influenced by existing long-term agreements (LTAs), remarketing exercises, and restructuring of programs.
• For auto liability, the average cost of a claim increased by 7% to 11% over the past year, primarily due to the cost of parts and service, which is indicative of vehicle materials and technology becoming more sophisticated and requiring specialists.
  • Electric vehicles continued to impact the auto insurance market, with insurers citing repair costs that are 20% to 75% higher than cars with combustion engines.

Financial and professional lines pricing declined 4% after being flat in the third quarter. 

• D&O pricing declined, with decreases generally in the 10% to 15% range.
  • D&O pricing was influenced by factors including an increase in market capacity and a lack of premium-generating M&A activity.
  • Program savings were largely driven by excess layer reductions.
• Financial institutions (FIs) continued to experience rate reductions between 5% and 10% as insurers sought to increase their business and the market saw new entrants, increasing competition. 
• New capacity in commercial crime coverage entered the market, leading to moderating pricing increases and stabilizing buying conditions.

Cyber insurance pricing increased 34%, compared to 66% in the third quarter.

• As losses continued to improve, the cyber insurance market trend was toward a moderation in pricing increases and somewhat broader coverage.
• Some industries, such as manufacturing, experienced higher rate increases than others.
• Competition increased in the cyber market in the second half of 2022, from both new and existing insurers in the UK and internationally.