Commercial rate hardening may slow in 2022, but still in ‘comfortable’ beat to inflation
The market hardening in UK commercial lines could slow in 2022 but still leave insurers with a “positive rate environment” driven by inflation, recent cat loss and “discipline in deployment of capacity” across the market, top officials at Aviva have said.
“We are in a hard market in most lines of business,” Adam Winslow (pictured), CEO of Aviva unit UK General Insurance, told an analyst conference, citing 27% annual growth as recently as Q3, down from a late 2020 peak.
“We expect this pricing growth to slow gradually, but remain attractive throughout 2022,” he said.
Chief drivers include claims inflation, some property cat loss including UK floods and “a lot of discipline in deployment of capacity” throughout the industry, Nick Major, managing director for commercial lines at the UKGI unit, added. Nat cat on global property offers one of the firmest outlooks through 2022, he said.
While the market has “no shortage of capacity” on the aggregate, broad-based discipline to lines such as cyber, D&O and professional indemnity has given the market some cases of exceptional rate growth.
“The market is maintaining that discipline,” Major said.
Rate gains are an easy beat to expected inflation. “Certainly in UK mid-market and global corporate [rates] will comfortably exceed the inflation prediction we have built in, so that rate environment is sustainable,” Major said.
Further out into 2023, the overall rate gain will slip back to a sustainable run rate, officials suggested.
“When you get into 2023, we are assuming that this will soften back to inflation levels, but there will still be certain sections challenged,” Major said.
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