DACH market ‘looking forward’ to another round of tough cyber renewals

A survey of risk managers, brokers and underwriters primarily from across the German-speaking DACH region, carried out during the GVNW Symposium by Commercial Risk in partnership with Liberty Specialty Markets, found that the market is expecting another tough round of renewals for cyber and property lines in particular.

The respondents expect general liability coverage to be harder or flat overall but the outlook on D&O is much more positive, with more than 60% expecting flat renewals in coming months. This follows a period of increasingly difficult D&O renewals particularly in Germany for GVNW members.

The survey asked what risk managers need to do along with their brokers if they use them to make the coming renewals easier.

The highest score by far came for retaining more risk, which is the harsh reality for most companies in this tough market.

We also asked what the insurers need to do to make the coming renewals less painful for buyers, and the top priority identified by respondents was to engage earlier.

This follows a period during which German risk and insurance managers in particular have been angry at the late and sometimes unexplained decision-making by carriers, leaving them scrambling to complete their programmes at the last minute.

The fact that the survey respondents expect cyber to be the most difficult of the major lines should not come as a surprise, as insurers and reinsurers continue to talk about how they need to manage their exposure to this potentially systemic risk at a time of rising claims.

Some 85% of respondents said they expect a further hardening in this line, with 15% opting for a flat renewal and none expecting a softening.

The outlook for the property market was perhaps a little more surprising, with 61% expecting a further hardening, 32% a flat renewal and only 7% a softening.

The general liability market outlook was more mixed, with 48% expecting a further hardening, 40% a flat renewal and 12% a softening.

The brightest outlook was for D&O, with only 32% expecting a further hardening, 61% flat and 7% even expecting a softening.

The respondents were asked to score five potential actions that risk managers and their brokers could take to make the coming renewals easier for them. The results were as follows: ‘retain more risk’ was top with 4.6; ‘seek alternative capacity in international markets such as London’ was second with 2.85; ‘change lead carrier’ was third with 2.8; ‘shift renewal date from year-end’ was fourth with 2.6; and finally, ‘use a broker’ came fifth with a score of 2.4.

The respondents were also asked to score four potential actions for insurers to take to make the coming renewals easier for all. The results were as follows: ‘engage earlier’ was top with 2.67; ‘make decisions locally not at HQ’ came second with 2.63; ‘hire more experienced staff’ was third with 2.53; and ‘agree common standards and questions for the whole market’ came fourth with 2.27.