London Market underwriters eye scope for new business, says Miller

Most sectors of underwriting in the London Market have the scope for new business, according to broker  Miller’s latest London Market update.

Increased risk capital is being deployed by existing and new underwriting businesses in the city,  Miller said. “Market share is therefore on most agendas which is a positive dynamic,” the update added.

Underwriters “are generally maintaining discipline in terms of risk selection”, the broker said, and they are demonstrating more breadth in interpreting their underwriting parameters on new accounts or restructured programmes.

Miller's half year market update shows the relative impact of increased capacity on each of the sectors the firm specialises in.

For example, capacity for cargo and stock throughput lines is growing, typically with single digit rate increases. Oliver Lombard, marine cargo broker at the firm, said: “There are an estimated 35+ syndicates and 20+ companies and MGAs in London plus international markets.

“We are seeing London underwriters being more competitive on new business with established markets looking for modest growth in their books of business while new entrants have much higher premium income targets to hit to achieve their ambitions and business plans.”

In the casualty Canada line there is new capacity and renewal rates are being secured at +5 percent or better. However, this is down from the +15 percent that has been pushed over the past three years, said Philip Johnson,  Miller’s head of casualty.

“We continue to have very limited solutions via Lloyd’s for ‘new’ accounts with thermal coal and oil sands exposures,” he added. But he said that where a good ESG plan is in place,  Miller has access to an international spread of non-Lloyd’s markets.

The cyber market remains hard with premiums increasing by 100 percent on average, according to Debbie Hobbs  Miller's head of Cyber, Technology & Media,

She explained: “The cyber market remains in a hard market cycle/corrective phase and the trends seen through 2021 have continued into Q1 and Q2 of 2022. Premiums have been increasing by 100 percent on average and it has not been uncommon to see rate increases of 300 percent for risks with no material change in exposure. This is often coupled with higher retentions and more restricted coverage.”

Hobbs said she expected this to continue throughout 2022.

She added that market appetite remains restricted with underwriters only looking to quote risks within ‘core appetite’.

“Insurers have reevaluated their portfolios and stripped out risks which no longer fit within their strategy, only retaining insureds with best-in-class controls.

“Many insurers are also stripping back certain elements of coverage, such as non-IT dependent business interruption, or imposing ransomware restrictions. In addition, certain industries that were difficult to place in a softer market are now almost impossible, which includes education, municipalities, government entities and IT and managed service providers.”

Construction (builder’s risk) saw rates around 5 percent higher than 12 months ago for standard risks, according to Andrew Clydesdale, head of international construction at  Miller.

“Rate increases have remained steady, and we are continuing to see rates approximately 5 percent higher than 12 months ago for standard risks. That being said, risks highly exposed to natural perils are seeing higher rate increases as capacity is reduced.

“Sub-limits and limits for extensions in cover remain higher than seen in domestic markets providing a competitive differentiation in favour of London.”

For Energy Upstream lines the boker is seeing low-to-mid-single digit rises across the upstream market.

Lianne Portman, account executive in  Miller’s energy team, said: “On larger, clean renewals, with little nat cat exposure, renewals closer to flat have been seen.”

She said that with strategic marketing and/or restructuring, market increases can be avoided and at times savings achieved.

However, she said: “An area that continues to remain challenging is clients with salt water disposal assets, where there is limited market appetite. This class has been closely scrutinised over the last couple of years and this continues to be the case."

A number of recent midstream claims has brought sector scrutiny from the market, particularly where there are large business interruption exposures, she added. “The market is pushing for mid to high single digit rises.”

The named windstorm market is seeing larger increases with no signs of slowing up and clients that suffered losses from Ida “face challenging renewals”. But, with possible restructuring these increases can be avoided, she said.

Further insight in the update included the start of softening rates in D&O as rate hardening looks to have “peaked”.

Marine hull is having a “revival of appetite” after the last few years of hard market.

Marine and transportation liability is experiencing rate rises between 7.5 - 12.5 percent across the board.

In professional E&O (architects and engineers) and contractors lines, there is “plenty of appetite” from  Miller’s Lloyd’s markets, particularly as wider market hardening takes effect.

And in the reverse flow/corporate retail UK domiciled risks lines, 10 percent rate increases are being applied to the majority of property renewals.

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