A tempering of the storm? Insurance market update 2022

Luke Chesworth
Head of Broking
18 August 2022
5 minute read

Competition allays the hardening insurance market

Over the past few years it’s likely you’ll have heard the insurance landscape for businesses referred to as a ‘hard market’.

These hard market conditions have meant businesses are likely to have seen premiums rise in recent years, whilst at the same time finding it harder to purchase more specialist covers or seeing the limits of cover available decrease.

It may be a relief then to hear that our analysis shows early signs that this phase is coming to a close.

Stability and confidence returning

In the first half of 2022, we have seen a softening in some commercial and liability insurance markets. This trend gathered pace in the second quarter of 2022, and has continued into the third quarter. New Managing General Agents (MGAs) have seized the opportunity and have hit their stride quickly, bringing new capacity to a market much in need.

The impact of this new capacity has increased investor and insurer confidence, which in turn has encouraged competition across the insurance market. Insurance is no different to any other market, and increased competition provides an improved environment for buyers. At Superscript we are able to successfully leverage these circumstances to provide even greater benefits for our clients. In some cases we’ve been able to achieve pricing reductions at renewal, while at the same time enhancing coverage for clients.

Despite the positive signs, a prudent approach to underwriting continues and some clients will still find the current market challenging. However, businesses with a strong management profile, an understanding of their risks and the ability to demonstrate how they mitigate this risk will find they can avoid the double digit percentage premium increases widely seen in previous years. In fact, for certain clients a flat renewal or premium reduction should be the target.

Cyber, the exception that proves the rule?

One of the biggest challenges in the insurance market, cyber, continues to cause apprehension amongst insurers as the claims landscape remains unpredictable.

Insurers will usually rely on past claims data as their north star for calculating future pricing. However, recent claims volatility in the cyber landscape has caused a re-write of frequency and severity modelling, meaning that insurers can take little reassurance from their own data to support confident decision-making on appetite or pricing.

Instead, insurers are becoming more educated about what constitutes good cyber hygiene and this translates to a set of benchmark requirements for clients wishing to obtain cover at a reasonable premium. When it comes to cyber, it is not enough to expect insurance alone to keep you protected.

The benchmark of security for businesses to obtain cyber cover at a reasonable premium will include the following requirements:

Privileged access management (PAM) tools Tools and technology used to secure, control and monitor access to a businesses critical information and resources.
Patch management and SIEM systems Patch management is the process of distributing and applying updates to software used by your company, often to maintain the latest security, while security information and event management (SIEM) tools provide real-time monitoring and analysis of events and tracking and logging of security data for compliance or auditing purposes.
Multi-factor authentication (MFA) Multi-factor authentication is a way to secure data and applications, where a system requires a user to present a combination of two or more credentials to verify a user's identity for login. This could include entering a password and presenting one time passcode texted to a verified phone number.
Remote back ups A remote, online, or managed backup service, sometimes referred to as cloud backup to provide businesses with a system for the backup, storage, and recovery of computer files
End point protection The process of protecting employee devices such as desktops, laptops and mobile phones from malicious threats and cyberattacks
Incident response and disaster recovery plans Comprehensive response plans for specific incidents that could imapct your cybersecurity, as well as disaster recovery to ensure management teams can quickly get the business back on track in the case of a disruption.

Compared to previous years clients may feel that this is an onerous condition for the purposes of obtaining insurance. However, the good news is that these requirements push the control back into the hands of clients and for those that can meet these standards we can leverage competition to enhance cover and reduce premiums.

Get in touch with a SuperscriptQ advisor.

Let’s tread carefully

Despite the positive signs, we should proceed with cautious optimism. It is impossible to ignore other macro factors such as rapid inflation, an impending recession and uncertainty on the outcome of the war in Ukraine. All of these factors could come into play and influence insurance pricing into 2023 and beyond.

For the time being, however, the market is reacting positively and we encourage businesses to react immediately and make the most of the changes.

What does this mean for businesses?

There are a number of actions businesses can take to make the most of these improving conditions in the insurance market.

  1. If you have had successive premium increases in past renewals, now is the time to ask your broker to search for premium reductions at renewal.
  2. Ask your broker about the latest cyber requirements being requested by insurers and start implementing these as soon as possible. If possible, do this sufficiently ahead of your cyber insurance renewal date.
  3. Review your cover, and where cover has been restricted in previous years challenge your broker to see if your cover could be improved.

How can SuperscriptQ help?

  • We offer a free health check - SuperscriptQ offers a free health check of your insurance cover and we can provide recommendations, free of charge. No obligations. No strings attached.
  • We are a Lloyd’s broker - Our access to over 60 insurers across the UK, Europe, Asian, Bermudan and American markets mean we’re confident that we can make the most of current market competition to get your business the right cover at the best price.
  • We offer an end-to-end digital service - If you are interested in working with us, we offer an end-to-end digital service which will streamline and simplify your insurance renewal process.

SuperscriptQ supports high growth tech businesses who increasingly require bespoke insurance to protect themselves and enable continued growth.

Contact one of our advisors to find out more.

Luke Chesworth is Client Lead UK at SuperscriptQ. With a Dip CII qualification and over 12 years’ experience in insurance. Managing our UK broking team Luke specialises in all things tech, with cover specialisms in professional indemnity, cyber and D&O. In 2020, he was named a top 100 D&O broker by Insurance Insider.

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This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.

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