Insurance market update for financial institutions around the globe.
We are pleased to share our Fall 2023 global financial institutions (FI) insurance market update, providing observations and insights from colleagues across our financial, executive and professional (FINEX) lines of business in 15 geographies.
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Insurance market conditions remain favorable for FI clients, with the majority of regions reporting placement outcomes in the Flat to -10% range, notwithstanding a deteriorating geopolitical and macroeconomic outlook, several bank failures due to unhedged portfolios earlier in the year, and concerns over a looming Commercial Real Estate (CRE) crisis.
There continues to be increased appetite for new business to help balance the rate compression insurers experienced over the past several quarters.
Across our Global FINEX FI portfolio, we are seeing a sustained and highly competitive global insurance market, with continued rate compression and no shortage of capacity, and we are starting to see coverage enhancements becoming available. There continues to be increased appetite for new business to help balance the rate compression insurers experienced over the past several quarters. We are also seeing increased competition in the primary layers of multi-layered towers, most notably from new entrants and excess insurers seeking opportunities to move further down in the tower where the rate-on-line is more attractive and they are increasingly willing to deploy greater capacity in a more concentrated manner.
From an underwriting standpoint, underwriters are asking more detailed questions around ESG, with greater focus on the E, portfolio credit quality and loan loss provisions, and due to the so called "refinancing cliff", they are focusing on the extent of CRE exposures within the loan and investment portfolios. The premise being that a large number of commercial mortgages will be coming due for refinancing over the next few years, and they will be subject to significantly higher interest rates at a time when vacancy rates are at an all-time high.
We will continue to monitor trends in the underwriting process and counsel our clients accordingly, however, we are optimistic that FI clients will continue to see favorable market conditions for the remainder of 2023, and into H1-2024.
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