The market conditions, rates and capacity during Q3.
Throughout Q3 the marine liability market has continued to seek rate rises on new and renewal business after significant losses experienced in H1 of 2021 as well as further deterioration on prior year losses. Rises of 12.5% to 15% on renewals with clean loss records and flat exposure are still commonplace. Notwithstanding this position, we are seeing an increased flexibility from some markets and a willingness to differentiate, particularly for accounts with a larger premium base or rating adequacy. Regrettably, this is not the case across the board with some insurers still maintaining a strong stance regarding budgeted rate rises. These markets are happy to decline business that does not reach this level which can create issues for high-capacity placements that require a large number of supporters.
As we reached the end of the quarter, syndicate business plans for 2022 were being submitted to Lloyd’s for approval. This process includes establishing budgeted rate rises through 2022 along with a syndicate’s appetite within a class of business. In our previous bulletin we referenced the market conversations we have been engaging in throughout the year and have continued these with new markets (Inigo, IQUW and Navium) to ensure we are able to access this new capacity as best as possible for our clients.
As we moved into the second half of the year, the Lloyd’s building had been open for just over a month and there was an optimism that the city would be returning to an element of normality. Unfortunately, as coronavirus cases rose in early summer and we experienced the ‘pingdemic’, the move back to EC3 was slower than expected, with large numbers of the population having to isolate. However, in recent weeks a buzz has returned, with the majority of underwriters frequenting Lloyd’s at least a few days a week.
With the return to offices gathering pace, underwriters and brokers alike are determining their plans for future working and it appears the consensus is that there will be a hybrid model moving forwards. Whilst the hybrid model works well for some transactions, there are also notable hurdles to overcome. For instance, as not all underwriters are present in Lloyd’s at the same time, some brokers are reverting to email negotiations and video calls, leading to a feeling that less business is being transacted at Lloyd’s. At Miller, we recognise the importance of being present, negotiating in person and are in the market on a daily basis on behalf of our clients.
After a challenging 18 months, we have been thoroughly enjoying meeting up with those clients we have been able to, engaging in productive meetings connecting clients with their leaders and supporters and will be ensuring this continues in the lead up to the 2022 renewal season.
Market movements and capacity
There have been no new entrants or significant changes to capacity during Q3 although the ongoing Lloyd’s business planning process will determine capacity available for 2022.
More generally, carriers have been deploying capacity outside Lloyd’s, utilising different platforms and trying to differentiate themselves from their competitors. This is more difficult to achieve on a subscription basis on high-capacity placements, but is a valid strategy in the physical damage arena and where smaller limits are required.
Rob Johnston (formerly of MS Amlin) joins Apollo syndicate as Head of Marine & Energy Liability while Atrium and IQUW have strengthened their marine liability teams.