Favourable market conditions for financial institutions into 2024

Insurance market conditions will continue to be favourable for financial institutions for the remainder of 2023 and into the first half of 2024, according to WTW, with the majority of regions reporting placement outcomes in the flat to down 10% range.

The broker said it is seeing a sustained and highly competitive global insurance market across its global FINEX FI portfolio.

In its Global Financial Institutions – Market Conditions Fall 2023 report, WTW says there is continued rate compression and no shortage of capacity. It is starting to see coverage enhancements becoming available, despite a deteriorating geopolitical and macroeconomic outlook, several bank failures due to unhedged portfolios earlier in the year, and concerns over a looming commercial real estate crisis.

Susan Finbow, global head of FINEX financial institutions, WTW, says in the report that there continues to be increased appetite for new business to help balance the rate compression that insurers experienced over the past several quarters. “We are also seeing increased competition in the primary layers of multi-layered towers, most notably from new entrants and excess insurers seeking opportunities to move further down in the tower where the rate on line is more attractive, and they are increasingly willing to deploy greater capacity in a more concentrated manner,” she says.

Finbow adds that underwriters are asking more detailed questions around ESG, with greater focus on the E, portfolio credit quality and loan loss provisions, and due to the so-called ‘refinancing cliff’, they are focusing on the extent of commercial real estate exposures within the loan and investment portfolios.

The regional rate movements seen by WTW across its portfolio are:

US

• D&O public: Flat to -10%, FI public rate change average -9%
• D&O private: Flat to -10%
• D&O/E&O: asset managers (excluding private equity) Flat to -10%
• Bankers professional liability: Flat to +10%
• Insurance company professional liability: -5% to +5%
• Fidelity/crime: Flat
• Cyber: Flat to -15%.

Belgium and Netherlands

• Crime: Flat
• Professional indemnity: Flat
• D&O: Flat to -10%
• Fiduciary: Flat
• Fund (investment management insurance): Flat to +10%.

France

• Crime (large and mid-market): Flat to -10%
• Professional Indemnity: Flat to -10%
• D&O: Flat to -15%
• Combine D&O/E&O – PE-VC/ asset managers (mid-market): Flat to -10%
• Cyber: Flat to -10%.

Germany

• Crime: Flat
• Professional indemnity: Flat to -5%
• D&O: Flat to -5%
• Fiduciary: Flat

Great Britain

• Crime: -5% to -15%
• Professional indemnity: Flat to -15%
• Directors and Officers: -5% to -15%
• Fiduciary: Flat

Spain

• Crime: Flat to +5%
• Professional indemnity: +10% to +20%
• D&O: Flat to -10%
• Fiduciary (BBB): Flat to -5% (claim free), +5% to +10% (with claims)

Sweden

• Professional indemnity: Flat to +7%
• D&O: -8% to +7%
• Fiduciary: -10% to +10%

Switzerland

• Crime: -5 to +5%
• Professional indemnity: Flat
• D&O: -10% to -20%
• Fiduciary: Flat