Spanish buyers see signs of softening but conditions remain tight

Rates are softening in the Spanish insurance market but underwriting continues to be rigorous and deductibles have not yet fallen, according to Alvaro Borderías Maroto, managing director of placement at Bowring Marsh in Madrid. “As in the rest of Europe, we are in a relatively flat market. Rate increases have been slowing down since the fourth quarter of 2022,” he said. “What we see in Spain is that the insurance market is changing and there is much capacity available for some risks. There is even downwards pressure in some segments, especially in financial lines.” The view is broadly confirmed by risk managers. A member of Agers, Spain’s risk association, who asked not to be named, told CRE that he believes the market is entering a softer period where it is now possible to think about higher limits and broader covers. Prices are more palatable but remain higher than many would like, said the risk manager, who works in the infrastructure sector. According to Borderías, the softening process started in D&O, and other lines, such as cyber, followed suit. The trend is mostly driven by new capacity. Some incumbent players have made more capacity available in the primary Spanish market, said Borderías. Others, like Everest, Mitsui, Sompo and Munich Re Risk Solutions, are making a push to grab market share, he added. “We have seen that some insurers that were already present in Spain have cleaned up their portfolios during the hard market and are now apparently in a more expansive mode,” he said. “There is also more delegated capacity from global reinsurers to MGAs that are getting into Spain.” New capacity has helped to stabilise the property market, although rates still depend on factors such as the quality of risk management and loss histories. Borderías said that for more complex risks, some buyers have endured tougher terms and conditions even if rates were mostly flat in July. But there remain difficult lines where insurers maintain their grip. In Spain, one clear example is motor fleet, where Borderías said that the market continues to be hard and restrictive. Some players have withdrawn from motor insurance in the country. Urban transportation buses and car-sharing firms are among the most impacted companies, and on some occasions, CCS, Spain’s catastrophic pool, has had to step in to make sure that all vehicles have mandatory third-party liability insurance in place. Particular sectors of the Spanish economy also still face a difficult market. The most noticeable example is the food industry, an important activity in Spain, where companies struggle to buy coverage due to fears over fire exposures. Waste management, heavy industries and companies with poor risk management practices are in a similar situation, Borderías noted. Spanish multinationals, for their part, need to find ways to cover catastrophic exposures in the US, which are hard to obtain right now. Product liability is another area of concern, and once again companies with activities in the US are most impacted. “At the moment, insurance for natural catastrophes [is an issue] in regions where we have some aggregation of losses, and also due to the impact of climate change,” the Agers risk manager said. “Liability [can also be challenging] due to legal uncertainty in some countries, where loss levels can grow exponentially.” Borderías said the new capacity in Spain has not yet seen a big jump in the number of insurers offering lead positions for complex programmes. “Underwriters remain selective about the risks they take. I would say that new players, as of today, are offering more following capacity than leading programmes,” he said. “Underwriting rigour is determined by leaders, and I do not see them relaxing their grip.” He added that retentions are yet to come down for many companies. Local underwriting teams, for their part, continue to enjoy little autonomy to make decisions about complex risks. Most still have to get authorisation from global headquarters to underwrite such policies or settle claims, he said.

Spanish buyers see signs of softening but conditions remain tight

Want to read this article?

Read Next

BIBA hands out key awards at annual conference

BIBA wants time limit on key disclosure requirements

Dutch risk managers urged to embrace uncertainty and work collectively to seek solutions

Uncertain world demands sharp focus on the basics

Product recalls in Europe hit 11-year high in Q1: Sedgwick

BIBA hands out key awards at annual conference

BIBA wants time limit on key disclosure requirements

Dutch risk managers urged to embrace uncertainty and work collectively to seek solutions

Uncertain world demands sharp focus on the basics

Product recalls in Europe hit 11-year high in Q1: Sedgwick

Keep yourself informed

Sign up for Commercial Risk’s newsletters

Want to read this article?

Read Next

BIBA hands out key awards at annual conference

BIBA wants time limit on key disclosure requirements

Dutch risk managers urged to embrace uncertainty and work collectively to seek solutions

Uncertain world demands sharp focus on the basics

Product recalls in Europe hit 11-year high in Q1: Sedgwick

Related Articles

Keep yourself informed

Sign up for Commercial Risk’s newsletters