North American Market Update 2024
PROPERTY
WHAT’S TO COME?
‘Stability’ is coming back into the market as it transitions from a sustained positive rate and premium trajectory of recent years into a ‘softening’ market.
Increased capacity combined with new capacity options is, in some cases, being offered by markets which is creating more of an ‘Oversubscription’ likely creating client choice with positive cost output in 2024.
There are no new significant capital injections into the market, aside from limited new capacity via MGA’s.
We see a ‘segmentation divergence’ emerging in the market.
FORTUNE RISKS
Fortune Risks with sizable premiums will see, and are seeing, the greatest competition as markets seek ways to maintain their position and premium income.
EXAMPLE
A major Multi-Billion Global Tech Enterprise where Asset Values continued with a further double-digit year-over-year value increase, yet markets were largely able to absorb a flat premium securing a rate reduction for the client who was also able to secure increased cover on critical business risk exposures with an oversubscription in capacity.
UPPER MID-MARKET
The Upper Mid-Market is also seeing increased capacity appetite, with low to moderate rate/premium increases from incumbents, and in some cases, new capacity coming in at lower premium than incumbents, offering overall cost improvement and capacity choices to clients depending on risk occupancy and CAT Exposures. However, there are examples where risk occupancy is still driving change in the domestic market creating opportunities for London or restricting Excess Capacity from incumbency to offset cost in the lower part of the program.
EXAMPLE
A Dairy Cooperative, with over $500m in Asset Values, was forced to reduce their Total Programme Limits. This was to offset increased cost of the primary limit, which had doubled from a single carrier solution who held out until the last minute in a final compromise to maintain their position against new markets.
SME TO LOWER MID-MARKET
The SME to Lower Mid-Market most likely remains the toughest segment, especially where there is deemed to be a more challenging risk occupancy and/or CAT exposed risks, with certain markets still seeking sizable increases, or where minimum premium / deductible requirements are met. In some cases, London is offering terms where domestic markets may be withdrawing or holding out for a ‘last look’ to maintain incumbency.
EXAMPLE
A Smelting Operator (Sub $60m in Asset Values) had suffered a loss and the incumbent market (Single domestic carrier) first looked to exclude their Business Interruption risk and eventually offered a sub-limit with a 60-day waiting period. London was able to offer 100% solutions on a primary basis to match the BI limit offered domestically with options for 10-15 day waiting periods and with a TCOR (Total Cost of Risk) at a lower level.
2024 OUTLOOK
The forthcoming weeks will likely set the tone for the remainder of the year, as Insurers look to achieve written income plans given that the majority of written premium income is in the first six months of any calendar year. Thereafter, for the remainder of the year, markets will no doubt be keeping a very watchful eye on the forecasts for if an extremely active 2024 Atlantic storm season comes to fruition, this may then determine the direction for the remainder of the year.
PORTFOLIO & DIGITAL PRODUCT SOLUTIONS
SABOTAGE & TERRORISM (AEGIS SHIELD)
Via an Insurer Quote & Bind Platform UIB can offer up to $250m of cover with automatic extension sublimits for ‘Active Assailant’ of $500,000 and ‘Threat or Hoax’ of $100,000 amongst other extensions of cover.
EXAMPLE
A multi-tenant hospitality risk including motels and restaurants, we were able to provide 100% solution for a full (circa $57m) value risk with an Aggregated Limit and a $5,000 deductible at a premium of under $5,500 (100%).
WHY CHOOSE UIB?
Over the past three years the average number of mass shooting in the U.S. is just over 660 a year and the news broadcasts demonstrate that these unfortunate incidents are not limited to large cities.
For Insured’s who are considering TRIA compared to a stand-alone solution which is not subject to Government Certification, this is a compelling consideration for any Board of a Company from a D&O perspective with incidental premium cost.
| COMPARISON | AEGIS SHIELD | TRIA |
| Trigger definition | Tried & Tested | Never triggered |
| Active Assailant included as standard | Covered | Not covered |
| Affirmative Denial of Access Coverage | Optional Extra | Property policy dependent |
| Terrorism Liability | Covered | Separate policy required |
| Sabotage | Covered | Not covered |
| Threat and Hoax | Covered | Not covered |
| Policy Length | Up to 24 months | Matches Property policy |
| First Loss Limit | Available | Not available |
WIND DEDUCTIBLE BUY DOWN
Via an Insurer Quote & Bind Platform UIB can offer Windstorm, Hurricane, Tornado and Hail deductible buy-downs where clients require a lower $ or % deductible.
THE BENEFITS
- Maximum Risk Limit of up to $3m.
- Available with no Minimum Premiums.
- Minimum retention $5,000 per occurrence if Policy below $25m and $10,000 if policy TIV above $25m.
- Available in all 50 states – Please consider clients with Severe Convective Storm exposures as well as Coastal exposures.
- The policy incorporates a Follow form which links and follows the overlying Property Policy.
- Wide range of appetite including Condo’s/multi-family housing, hotels, offices & retail units including Course of Construction risks (including Frame).
PARAMETRIC
For Property, Construction, Agriculture, Renewable Energy & Cyber Clients.
SOLUTIONS FOR:
- Frost, Snowfall, Drought, Solar radiation, and Yield Protection.
- NAT CAT – Cyclone, Wildfire, Windstorm including Hail & Tornado, Flood, Earthquake.
DEDUCTIBLE BUY-BACK / CARVE-OUT / SIDE-CAPACITY
STOCK THROUGHOUT (STP)
STP AND PROPERTY
There is a correlation between the STP and the Property market where new alternative participants are competing with incumbents for business, resulting in more favourable terms & conditions for clients, this has been gathering pace in Q1.
The balance of the year will likely also be based on any increased hurricane activity. With the improving market, London has stepped up its appetite for more ‘difficult to place risks’.
EXAMPLE
A difficult commodity category (Food) where in recent years it has not been feasible to remarket the risk due to coverages included with this year proving more viable to alternative markets resulting in improved terms and conditions including double digit rate reduction on higher reported values.
CYBER, MEDIA & TECHNOLOGY
CYBER MARKET GROWTH
The North American Cyber market is expected to grow by approximately 20% in 2024, (according to S&P global ratings,2023) this will mainly be via midmarket (USD 100M – 300M annual revenue) clients buying for the first time and existing clients purchasing higher limits of indemnity as excess placements becomes more affordable.
There is a modest premium rate reduction of 5-10% being offered on renewal business with good IT security control, and those who subscribe to continuous network perimeter monitoring, which most carriers and MGAs are offering free of charge. SME accounts (<$100M annual revenues) are still very competitively priced as new MGA entrances and existing carriers are fighting to grow and maintain market share. Sustained losses are being evidenced due to ransomware attacks which is the key driver of the first party costs and expenses of most cyber claims.
WHAT TO LOOK OUT FOR?
The regulatory environment is also active, as carriers grapple with how to manage large portfolios with various state drafted privacy focused regulations that have national effect. The Biometric Information Privacy Act of Illinois is a classic example as it is based on the use and storage of biometric identifiers and how companies comply with certain requirements to provide a private right of action for recovering statutory damages when they don’t. The healthcare and data management technology sectors have been most affected by this law which is causing underwriters to be more cautious in their approach to these types of firms.
With increased third-party capital entering the markets via traditional carriers as evidenced by Beazley’s USD 140M Cyber Cat Bond and new entrants, the market is poised for higher growth via increased product innovation that may reduce the length of application questionnaires and quoting time to streamline the underwriting process as underwriters position themselves to increase their net written lines.
