Primary market can deliver hardening rates into 2023 to get grip on prior loss cost: AXIS

Primary market insurance rates can continue to harden even into 2023 as the industry plays catch up for “many years of unsatisfactory performance,”  AXIS Capital CEO Albert Benchimol told the Q4 earnings conference.

“We expect discipline in pricing through 2022 and potentially into 2023,” CEO Benchimol told analysts, citing a belief that the industry can retain its focus on prior loss cost.

AXIS averaged 14% growth in Q4 and FY2021 with roughly even growth rates across  AXIS’ North American and London presences. Professional lines led with an average rate increase close to 24% by Q4 for AXIS, neighbourhood 80% Q4 growth for cyber. Mark AXIS property rate up near 10% and liability and casualty “all high single digit” for Q4.

In cyber, AXIS is looking past the 80% rate growth with an eye to even out the performance of the book via “meaningful changes to our underwriting guidelines.” That has included more demands for cyber hygiene, new sub-limits and other restrictions.

The group is taking “large price increases” on its policies, but is losing its ease amid a volatile claims landscape.

“The truth is that the cyber book we are writing today is making a profit,” with no sense of using rates to outrun uncontrolled claims. “This is not runaway loss costs,” Benchimol said.

“This makes an underwriting profit, we just don’t think it makes a sufficient underwriting profit to justify the volatility and the capital it requires.”

AXIS has likely reduced gross exposure by 40% since June of last year, Benchimol said in what sounded to be a rough estimate. “I think we’ve done all the right actions on managing exposures.”

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