General

• Most territories and lines of business have continued to see a hardening of rates and terms for D&F.
• The impact of Covid-19 has had a dramatic effect on the global insurance and reinsurance market both in terms of rates and conditions, as well as the methods of trading and operating. Despite the extraordinary pressures on the supply chain, the sector has generally demonstrated a robust response to the crisis in terms of Business Continuity Planning.
• Communicable Disease exclusions are being imposed by many carriers.
• Cyber coverage is now being carefully reviewed on all our business.
• Core business is a major focus for London markets, however innovation and the appetite for new opportunity is still strong. 

Europe

• Covid-19, naturally, is a key factor going forward for the industry as a whole.
• The rating environment is sporadic, coming into the key renewals of 1st June and 1st July. 
• Some clean renewal business attracting rates upwards of +10% and have also seen new markets under-cutting incumbent pricing or offering larger sublimits or lower deductibles to try to prize away good accounts for the existing panel.
• Pre-Covid-19, we were seeing the moderate imposition of harder-market terms, such as London markets trying to impose stricter Cyber conditions (imposition of LMA 5400) and adherence to market standard clauses (disciplined application of Sanctions clauses and other clauses such as nuclear chemical biological exclusions, which were not imposed in previous years).
• Post- Covid-19, markets have hardened terms and some are starting to attempt to impose further rate increases across the board. We have seen sensible and proportionate responses to key European accounts so far, with +5 to 15% rate increases on average. Of course there are outliers, which have seen much higher increases due to loss frequency or premium reductions in the face of diminishing insured values (reducing natural resource prices or business interruption figures).
• Business Continuity Planning of markets and clients has been excellent, with very little discernible difference in service levels.
• Client buying patterns are also starting to change and vary from client to client. 
• Most clients are renewing key accounts and seeking to purchase Fac as a way of keeping large line sizes or to mitigate volatility.
• Most clients, overall, are accepting pandemic / virus exclusions where they seek to put them on the direct terms. A key factor in all Fac placements is the requirement to place ‘back-to-back’ coverage.
• Europe tends not to experience the same ‘knee-jerk’ peaks and troughs in rating and appetite as some other territories. We can still class the property market in Europe, generally, as stable following an upward trend in rating.
• The outlook amongst most European carriers is stable; most are putting out conservative Covid-19 loss estimates, but it is too early to know whether the losses will be a profits event or will affect capital. 
• Notable insurance companies are setting aside significant sums to aid those affected by Covid-19 as a form of solidarity fund.

UK

• Average rate increases are in the 5% to 10% range.
• Direct market renewal retention rate is high with majority of accounts staying with incumbent, however alternatives to existing Fac arrangements are being sought.
• The biggest development is obviously the introduction of a plethora of Covid-19 exclusions. This is both from a cedant and reinsurer perspective.
• There is little consistency in the market in respect of which exclusion to adopt for Contagious Disease. We are seeing reinsurers who are excess of Infectious Disease limits / Non-Damage Business Interruption, etc. still insisting on the exclusion and not relying on the policy wording. 
• Some 1st April Treaty renewals proved troublesome with some markets applying exclusions at very late notice.
• We are now seeing a greater number of Direct brokers extending their policies due to capacity shortage.
• Greater emphasis on full and complete underwriting submissions to support placements.
• 30-day extensions on renewals are also being seen more than usual, due to direct brokers having gaps appearing on the front end.

USA

• The rating environment continues to harden for US property risks. The starting point for clean renewals is +10% to 15%. Loss affected, CAT exposed risks can be anywhere from +25% to 50% dependent on quantum, risk profile and the amount of capacity required from our markets.
• As is now known, Lloyd’s markets collectively did not return a profit for the 2019 year of account and so the ongoing focus on terms and conditions as well as price continues. Only those submissions with quality and plentiful risk information gain underwriters’ attention. Despite the ongoing lockdown, new business submissions are continuing to make their way to London with most markets having adapted well to entirely electronic placing. Underwriters are looking more closely at business interruption coverage provided under current policies and further scrutiny of related sub-limits, especially in respect of hospitality risks where loss of attraction may be given.
• The evolution of policy language to deal with communicable diseases, including Covid-19 is ongoing and is a further aspect brokers now have to negotiate to achieve consensus.

Asia and Sub-Continent 

• Hardening has not yet started in local markets as Treaty accounts were renewed without big rate increases at 1st January.
• Facultative underwriters, however, are continuing to harden in respect of rating, with the range of rate increases varying (0% to 50%) depending on market, occupancy, coverage and loss record.
• With underwriting discipline hardening, it is becoming more difficult to arrange reinsurance for those cedants who provide broad coverage to their clients as reinsurers are starting to decline to cover such special extensions under their book.
• Whereas Cyber exclusions were the hot topic in the early stages of the 1st April renewals, Virus exclusions suddenly became the main focus of discussions in the final stages of the negotiations.  
• Cedants are having to absorb the gap between local and international market pricing by reducing their commissions (in order to meet the rating) and by accepting differences in conditions (due to the application of exclusions).

Latin America 

• The region is likely to be affected heavily by the current Covid-19 outbreak, albeit with some delay. The effects of ‘lockdown’ have already been seen across many industries such as those in the hospitality and heavy industry sector, leading in some cases to serious cash flow issues, and therefore requiring balance sheets to be closely monitored.
• Issues of security during ‘lockdown’, bring to light further concerns following the SRCC outbreak, which started in Chile last October. This is leading to a sharp increase in stand-alone coverage sought separately and alongside the ‘All Risk’ property policies. 
• The local market remains strong at this time, with a surplus of capacity for many ‘vanilla’ type occupancies. London, however still remains the home for the large, complex and specialised risks, where capacity is still required.
  
  

Middle East 

• Pressure continues on regional offices of global reinsurers to underwrite for profit rather than market share. 
• Heavy industrial and energy accounts are continuing to face upward pressure on rates, with a regional minimum of +20% and far more on loss affected accounts.  
• Capacity continues to withdraw from the region, with AIG and Allianz announcing the closure of their Dubai operations in the past few months.
• The effects of the oil price falling amid the Covid-19 crisis looks set to further tighten the available capacity in the region, with escalating pressure on rates. 
  
  

Australia/New Zealand 

• Continuing lack of appetite locally on certain types of business, in particular Wind and Recycling.
• Australia has been affected more lightly by Covid-19 and we expect operations to begin in earnest sooner than in some other countries.
• Those accounts with EPS construction have suffered from larger than average rate increases over recent years, with some of the smaller operations struggling to meet the minimum premiums set by London markets.
• Insured’s balance sheets following Covid-19 will be closely monitored by brokers and underwriters alike.
• Bushfire exposure is being closely scrutinised and insurers are keen to avoid a repeat of recent events in New South Wales and Queensland in particular.