French market soft with signs of innovation but insurers selective in loss-hit areas: AMRAE

The soft commercial insurance market continues for French buyers, but insurers are becoming very selective about certain risks and reacting to even small losses suffered by insureds, according to AMRAE. In its annual State of The Market report, the French risk and insurance management association says insurers continue to come under pressure over pricing and buyers clearly have the upper hand if they can show a commitment to risk management and good loss histories. In addition, the French market is filling some gaps in coverage that insurance buyers have complained about in recent years. AMRAE notes, for example, that non-physical damage business interruption coverages have become more available. The association highlights an “innovative” policy designed by brokers Siaci Saint-Honoré, with the help of Allianz Global Corporate & Specialty and Deloitte, to transfer business interruption caused by problems at suppliers. In its newly-published report, AMRAE says the French commercial insurance market has now seen more than 15 consecutive years of falling prices. “In general, the market remains very soft, with few signs of rate increases,” comments Anne-Marie Fournier, a vice-president at AMRAE. “Any increases are due to micro trends only.” Exceptions to the general trend include cover for fraud risks, which have seen increased incidents in recent years and are hard to place. A similar situation exists for operational risks at financial institutions. Motor business, where insurers’ technical results have been under pressure for a few years already, has shown a stabilisation of prices, and upward movement in some cases. The overriding news is that underwriters are eager to retain good risks, while applying a much more selective filter on those that present bigger levels of uncertainty. “It is a certain paradox that on the one hand, insurers complain that their volume of business is reducing, but they concentrate their activities on the best kinds of risks, which, by definition, will bring them lower volume of premiums,” Ms Fournier points out. She also warns that underwriters have become “ultra sensitive” to the slightest loss event suffered by clients. “An accidental event ends up being seen as bad risk management,” she comments. One specific segment where price reductions have receded a little is cyber, according to the report. “Rate competition is less conspicuous than in previous years, in a context of visible losses,” the authors claim. According to AMRAE, cyber insurance rates were on the slide until May or June. But insurers then posted a hike in loss levels in the EMEA region, while the WannaCry and NoPetya attacks boosted demand for coverages by industrial companies. But there still is much competition in the French cyber market, especially for small and mid-sized capacities, AMRAE concludes. New players such as Generali, Mitsui and QBE have entered the French cyber market to try and meet the growing demand. In D&O, AMRAE has found that capacities are on the rise and rates are on the slide, with price reductions reaching up to 10%. But insurers have demanded higher deductibles for fraud coverage, the report points out.

French market soft with signs of innovation but insurers selective in loss-hit areas: AMRAE

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