With over 62% of airplanes grounded in April, the value of the top 10 insured airports has shifted, said Suki Basi, managing director, Russell Group speaking to AM Best TV.
April Renewals Round-Up
08 April 2020 | Blog Post
The renewal season is always a difficult time in the insurance industry, as insurers battle against the clock to secure their renewals. Yet, in what is already a high-pressure situation, add a world-changing event in the form of COVID-19 and it makes what was a stressful task, even more harder.
While it is too early to determine the trends and analysis from the April renewals, for the keen market analysts, there is the annual Willis Re 1st View report. This year’s report makes for an interesting read, particularly on the changes within the specialty classes.
The environment in which the April renewals are taking place is a difficult time for the market. Lloyd’s of London which has had its rating under review since June 2017, when it reported lower underwriting performance than expected, was placed on negative watch by Fitch Ratings in early April 2020. This was mainly driven by concerns around COVID-19, with the rating agency saying that Lloyd’s was exposed to COVID-19 related losses through event cancellation, business interruption, directors & officers’ liability and trade credit lines of business.
On the topic of COVID-19, the report said that the pandemic did not have a big impact on the renewals, with many underway and placed before the pandemic took hold in February/March. Meanwhile, any programs that were placed during the lockdown had COVID-19 exclusions written in them.
The Specialty classes take a hit
Moving away from a wider market view, what is the state of play in the specialty classes?
The main theme in the Casualty sector is the growth of cyber exclusions, which in turn has fueled premium growth in cyber as whole. Yet, alongside this surge in growth, there are concerns about a hardening in pricing conditions driven mainly by a tightening in reinsurance capacity, particularly within aggregate stop loss.
Moving onto Marine, the report highlights the challenging renewals, which saw (re)insurers reduce lines rather than decline programs, with a view to maintaining their current client relationships. This is in keeping with the current trend in the market as a whole, with Lloyd’s challenging the market to demonstrate profitability, a move that resulted in some syndicates pulling out of the marine market.
Finally in Aviation, COVID-19 made its presence felt with a drop in air travel along with the manufacturing of aircraft, a shift that will impact both premium incomes and current rates.
Calm before the storm
For the time being, the April renewals were sealed and delivered, continuing 2019’s year of robust results for the market as a whole. Yet, there are warning signs within the specialty classes, particularly with regards to tightening retro capacity and the negative watch placed on Lloyd’s. However, the looming threat, which threatens to overweigh them is COVID-19 - and the impact of that is still to be written.
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