Rates stay flat in Q1 for EMEA buyers but climb in Italy, Iberia and the Netherlands

Rates across the EMEA region averaged flat in the first quarter of 2024, according to Aon, although Italy, Iberia, the Netherlands and South Africa saw moderate rate increases of between 1% to 10% and with the most significant price increases reserved for loss-impacted risks.

Publishing EMEA trends in its Q1 Global Insurance Market Insights report, the region continued to average flat rates also seen in Q4 2023, which has now spread to all other regions in Q1 other than Latin America. Aon says underwriting remained disciplined in the region, with buyers asked to provide more detailed risk information as insurers focus more on risk differentiation.

“The year started as it finished. We continued to see insurers focus their attention on risk quality, creating opportunities for clients to differentiate in an effort to secure an optimal result,” says Terence Williams, chief broking officer, commercial risk solutions at Aon.

Capacity was ample in most markets, though abundant in the Netherlands, Iberia and DACH countries, Aon says, while more flexibility returned for negotiations on coverage, with enhancements available for buyers coming to the table with high-quality underwriting details. However, Aon notes coverage restrictions continued for loss-impacted perils and exposures, in particular secondary perils, contingent business interruptions and forever chemicals per-and polyfluoroalkyl substances (PFAS).

Property led improving market conditions for EMEA buyers in Q1, with many insurers targeting the line for growth in 2024. Aon reports “more positive” property renewals while rate pressure “eased” in the EMEA region in Q1. While prices generally continued to increase, renewal rates were flat, with reductions for some risks attracting competition. Conditions were moderate for most property markets, but more challenging for buyers in Italy, the Nordics and South Africa, and soft in the Middle East.

Property buyers in heavy industry segments, specific perils (such as contingent business interruption, nat cat and secondary perils), and inflation-impacted risks also faced a more challenging market in the EMEA in Q1, Aon reports.

“Waste was the most scrutinised industry sector across EMEA, and insurers had limited appetite and capacity availability for such risks,” Aon says.

The cyber market in the EMEA region continued the “buyer-friendly” trend of 2023, with conditions for the line averaging soft and rate cuts common, although with more moderate buying conditions in Italy, the Netherlands and South Africa. While capacity remained strong and rates decreased, buyers looked again at their risk exposure to cyber.

“The increase in frequency of incidents prompted clients to consider long-term goals for their cyber insurance strategy and to ensure that their cyber insurance strategy was complementary to their overall cyber resilience strategy,” the report explains.

For EMEA insurers, systemic risk remained a major concern for the cyber line in Q1, with some restrictions on coverage for critical infrastructure, correlated events and war, while an uptick in privacy-losses for US-exposed business triggered greater underwriting scrutiny.

Rates also remained favourable for D&O buyers in the EMEA in Q1, with rate cuts continuing, Aon says, but it warns of “more conservative” underwriting in the next few months as concerns grow about ESG and cyber disclosures, growing insolvencies, and an increase in collective legal actions.

“Insurers started to assess (reduced) pricing versus increased exposures,” Aon says, with insurers also watching for the impact of new regulations. In particular, it highlights the “failure to prevent” fraud offense under the UK’s Economic Crime and Corporate Transparency Act 2023.

Aon saw competition strengthen for casualty risks without US exposures or in non-high risk industries, leading to rate reductions for the most favoured risks as insurers went head-to head to retain renewals and maintain growth targets.

Aon says insurers in the region were most concerned about the growing frequency and severity of casualty losses from US exposures but were also troubled by the potential impact of new laws and regulations on the horizon in the EMEA.

At the same time, buyers of liability cover in high-risk industries such as pharmaceutical, chemicals and mining were challenged by capacity limits, coverage restrictions and increasing deductibles and premiums. Most insurers excluded exposure to PFAS on Q1 liability renewals, Aon notes.

The auto market remained challenging for buyers across the region in Q1, Aon says, driven by rising claims costs from nat cats, inflation and supply chain issues. Rate increases are continuing for most markets, although strongest in Iberia, Italy and the DACH countries, Aon reports.

 

Aon advises clients in the EMEA to start renewal planning early with broker and insurer partners, while also keeping in mind Plan B strategies and alternative solutions to traditional risk transfer.

With the current favourable cyber market conditions, Aon urges buyers to look at their cyber cover, limits and deductibles and to re-enter the market for those currently without cover. D&O buyers are advised to “adjust budgets” ahead of a potential shift in market dynamics.

Breaking down the EMEA region further, Aon finds that DACH countries saw underwriting discipline continue in Q1, although with variations by product, with property moderating after years of rate increases. Q1 recorded flat renewals for property buyers, although rates continued to climb for poor-performing or lower-quality risks. Liability buyers in the DACH region saw common modest price increases but flat renewal pricing for the most preferred risks.

The Spanish market recorded capacity in abundance in Q1 after new insurers and MGAs entered the market and created healthy competition. The market was favourable for buyers across most lines, Aon says, led by D&O, professional, cyber, general liability and preferred property risks, while motor fleet stood out as the most challenged class of business.

In neighbouring Portugal, Aon reports growing interest from international insurers, which it says helped moderate the market environment for most risks, although increasing third-party service costs put prices for local compulsory policies under pressure.

Italy recorded challenging market conditions for buyers in motor and property following heavy losses from nat cat events in 2023, with insurers deploying capital more conservatively and revising terms and conditions. Buyers found competitive or alternative property terms hard to achieve, but most likely for risks with detail underwriting information and favourable loss history.

However, Aon says mandatory nat cat cover for corporates, due to take effect from 31 December 2024, is expected to create a surge in demand.

Property and marine market conditions were moderate in the Netherlands in Q1, Aon says, with the growth ambitions of insurers driving some rate cuts. General liability and financial lines also recorded moderate market environments but were more challenging for risks with US liability exposures.

Bucking the general trend for soft cyber rates in Europe, the Netherlands recorded a more moderate environment.

In the Nordics, Aon reports portfolio re-underwriting resulted in decreased line sizes and in some cases refusal to quote. But moderate rate increases and firmer risk management requirements imposed on some risks opened the door to global insurers. Nat cat-exposed property risk saw sub-limits introduced during the quarter, Aon says.

Most classes of business in the UK saw market moderation or improvement in Q1, Aon says, with price increases limited to specific cases and flat renewal rates increasingly common as insurers set new growth targets.