UK rate softening spreads to P&C lines: Aon

UK buyers were able to secure lower premiums for some property & casualty placements as rate softening spread from financial lines to more markets in the second quarter of this year, according to Aon. Following the publication of its Q2 Global Insurance Markets Insights earlier this month, Aon revealed specifics for the UK market, which it said saw the greatest rate cuts of between -11% to as much as -20% in directors & officers and cyber placements for all client segments during the quarter.

“Driven by strong insurer results, the emergence of insurer growth plans, healthy competition and an expansion of capacity, price reductions were applicable to a wider area of the market,” Aon said, adding that many risks benefitted from a more favourable pricing and underwriting environment.

The UK market overall recorded rate reductions of between -1% and -10% with only automobile still showing rate increases, up between 1% and 10%.

Competition in UK casualty was “fierce for in appetite risks”, Aon said, but it noted PFAS was a “key product concern” and insurers required clients to disclose exposures to determine whether to apply exclusions.

But flat pricing or rate reductions were less common in automobile insurance, some industry sectors, loss impacted programmes, poor quality risks and specifics perils within each class of business, Aon said. While softer market conditions spread to some property risks, Aon said “challenging pockets” remained for heavy industry and certain coverage areas such as strike, riots and civil commotion, contingent business interruption and nat cat property.

Automobile continued to be dogged by profitability concerns and rising costs, which Aon said created moderate-to-challenging market conditions for the line and modest price increases continued, although risks able to demonstrate strong risk management achieved superior outcomes.

Overall, Aon said “underwriting continued to become less rigorous and more flexible” during the quarter, although dependent on class and individual risk profiles but driven by growth targets and growing competition in some parts of the market.

Buyers were met with sufficient levels of capacity in the quarter, Aon said, driven by both an increase from direct insurers and reinsurers across most areas of the market and from both established insurers looking to expand capital and new market entrants.