Competition set to further ease French market in 2024

The rapid blanket hardening in the French insurance market appears over for now, with brokers, buyers and even insurers expecting competition to mount this year and usher in a more benign, or even softer period, for good risks. But things are still far from easy for French companies, which face a split market and shouldn’t expect things to turn completely in their favour, particularly when it comes to lowering deductibles, experts say. And there are signs that the hard market has trickled down from the corporate space and is now hitting French SMEs, experts told Commercial Risk as French risk and insurance managers began their annual AMRAE conference in Deauville this week. French brokers and insurers said market-wide prices and conditions stopped hardening at year-end renewals but warned buyers they will continue to pay significant amounts for their covers in many segments, and find capacity for a number of risks still hard to come by. But at least there is room to haggle on the main programmes such as property and liability. And some market players have even used those tantalising but unimaginable words – “soft market” – to describe some lines, such as cyber. “Rates in the cyber market were down in the latest renewals. The market has even become soft,” said Philippe Maraux, head of placements at Marsh France. “On cyber, there have been some significant rate reduction in the French market, and new players have entered the segment,” added Jean-Marie Haquette, the CEO of HDI Global in France. “We adopt an extremely careful strategy, but for a certain number of clients that we know very well, and only for them, we are ready to move down from excess capacity to the primary layers.” This is a refreshing development but not characteristic of the French market as a whole. But there is reason for optimism in many other lines because insurers are slowly coming back to the negotiating table. Some are starting to reward good risk management histories with more beneficial rates, terms and conditions. And competition is predicted to heat up this year, making things easier for risk managers. “The market is a bit frozen. Few accounts have switched insurers, as companies are doing everything they can to retain good risks,” Haquette said. “But we expect a higher number of tenders and competition in 2024.” The return of tenders is a sign that competition is starting to mount, and buyers feel more comfortable putting in time and effort to request better deals from underwriters that are increasingly willing to fight hard to add or maintain good risks. “We have seen a message from insurers that was much different from previous years,” said Sandra Magny, head of market relations at Marsh France. “They want to gain new business and are ready to do it in lines from which they had disengaged until recently. They also showed a strong willingness to retain their accounts.” “We expect in 2024 to continue the landing from the market correction. I believe we are going to enter a softer period, more open to negotiation. But the case-by-case analysis of clients will remain, that is for sure,” said Daniel Bohbot, from broker Verspieren. “Generally speaking, good risks have been easier to renew, but it has been a different story for those risks that have insufficient prevention or poor claims experience,” said Delphine Leroy, the general manager of QBE France. Oliver Wild, president of French risk management association Amrae, believes the time has come for insurers to further boost discussions with buyers. “I am hoping for a bit of stability, but what I am really hoping for is more dialogue between insured and insurers so that there is a better understanding of the risk, rather than unjustified price increases and exclusions,” said Wild, who is also group chief risk and insurance officer at Veolia. He stressed that some segments continue to present significant challenges for French companies, even when their risk management is high quality. “The market for liability risks remains pretty hard, while cyber has sort of tapered off a bit, after very strong increases,” he said. “That was to be expected. Seven years ago, cyber was probably underpriced.” French risk managers that spoke to us as part of our Risk Frontiers Europe survey (covered in this issue) agreed that renewals were better this time around. Camel Sekkai, head of Amrae’s Northern section and legal director at car parts and accessories group Mobivia, has already noticed a new attitude from insurers during negotiations. “This year, renewals were noticeably better than in the previous two or three years, when they were catastrophic,” he said. “It was the first time where insurers have come back to the discussion table, something that had been lost. They have agreed to talk and exchange views.” He said renewals were mostly stable. “We have not seen rate reductions, but no increases either,” said Camel. “But we have seen an impact on deductibles because insurers are increasingly mapping their risks, especially property with nat cat exposure. At some sites, deductibles have shot up, in a very localised way. That seems an intelligent approach to me, as insurers do not brutally apply a big deductible across the board because three or four sites are exposed to flooding or cyclones,” continued Sekkai. Amrae board member Frédéric de Serpos said that, to some extent, January brought a welcome change from what happened in recent years. “The latest renewals were less difficult than in previous years. There was more continuity and the relationship with the insurance market was more serene,” he said. “Insurance budgets suffered fewer changes, and we did not see rate increases of 20%, 30% or 50% as in recent years. There were even some rate reductions. It was a positive process for buyers,” he said. However, De Serpos, who is also the head of insurance and risk manager at retailer Groupe Casino, said that we are far from a return to the soft conditions of the 2010s. In fact, risk managers have had to prove their worth in order to get favourable renewals. “Plenty of energy to demonstrate the quality of risks was required,” he said. “It was necessary to be very convincing to obtain a rate reduction, there was no decreases due to higher competition alone. The key was to show that rates were too high, and the time had come to adjust them downwards according to the quality of risks.” So it seems clear that insurers will not pursue new business at any costs. Despite the recent loosening of reinsurance markets, brokers say that insurers continue to be selective with the risks they take on. And there are plenty of risks that insurers are still very wary of. For buyers that work in areas such as waste disposal, passenger transportation, wood manufacturing or agriculture and food, the latest renewals were as tough as the past few years, market participants say. Companies with nat cat or liability exposures in the US have also struggled, and specific covers such as war insurance in maritime policies encompassing the Red Sea, and political risks in some jurisdictions, have posed difficulties for buyers. And then there are the old problem areas for French risk managers, such as motor fleet, construction risks and strikes, riots and civil commotion, which saw another round of harder market renewals, according to WTW. So it is premature to talk about a definitive end to the hard market. A more civilized market may be a better description of France’s insurance environment in 2024. But it seems that one of the main developments in the hard-as-rock market of the past three years – ever higher deductibles demanded by insurers – will prove a tough nut to crack. “It is easier for insurers to accept rate reductions than to agree on lower deductibles,” said Denis Bicheron, the head of technical lines at WTW. “Accepting lower deductibles is a jump into the unknown, as insurers do not know the loss ratio of the layer that was retained by the client.”

Competition set to further ease French market in 2024

Wild urges insurers to boost dialogue as problem areas persist

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