Brussels, 16 October 2023: Last summer, the French regional Financial Lines, Cyber and Professional Indemnity insurance market was one of caution; its outlook dominated by inflation, rising energy prices, Brexit, sanctions, tightened capacity and high premiums. Twelve months on and while many of these factors are still influencing the global landscape, a shift has occurred. Jérôme Gillet, branch manager at Alta Signa, provides a "state of the market" update on the French region.
The cycle of soft and hard markets in the insurance sector has, for the most part, always been somewhat predictable: but this last market cycle has been different. The last hard market cycle in 2002 lasted for nearly 5 years. This hard market cycle has been underway for less than 3 years and clients are already obtaining substantial premium decreases. This softening market trend is most prominent in the airline, hospitality and leisure sectors, which all experienced huge premium increases during the covid pandemic. As a result, the French financial lines market is becoming extremely competitive again, especially Directors' and Officers' liability insurance (D&O).
The outcome of this sudden market shift has been very interesting: Insurers wishing to increase their market share are offering clients substantial premium discounts - some as high as 70%. This pricing doesn’t follow the underlying risk exposures being underwritten, and has been seen as a surprise by many. We are also seeing an increase in Long Time Agreements, with clients asking for two, even three-year agreements to secure these lower premiums.
Another trend which we are keeping a close eye on is the increasing levels of bankruptcy in the D&O market. There has also been a shift in cyber insurance, which has evolved from a “bolt on” afterthought to a standalone product. Less than 2 years ago, premiums were incredibly expensive in this segment, but with more and more actors entering the market prices are starting to ease contrary to the increase in notable Cyber loss events.
Navigating today’s climate
To successfully operate as a Managing General Agent (MGA) in today’s marketplace means being proactive as well as flexible and reactive. In practice, this means our team needs to have strong technical knowledge and understand local market conditions to be able to recognise and respond to new and emerging trends quickly and efficiently. Having this edge is critical.
Thankfully, our team has twenty-plus years of experience in the French market, and we are in the unique position of working with a panel of very credible and knowledgeable risk carriers as well as having strong relationships with local, regional and international brokers. As a result we can confidently and effectively navigate market complexities.
We are regulated in France as an insurance intermediary, but our activities are distinctly different to that of a broker. As a MGA we represent the interests of our insurance partners and their need to make a fair underwriting profit.
Mapping out tomorrows landscape
We work closely with local brokers based in France, Belgium and Luxembourg to place local risks in line with the risk appetite of our panel of international re-/insurers. And with the challenges faced in many cat-exposed regions, an increasing number of insurers are also now looking to grow their presence in Continental Europe as a simple risk diversification play. This is positive news for us, and means that we can continue to grow our panel of international re-/insurers with new capacity and a quality of service that sets us apart from the competition.
But it isn’t just about what we offer - it’s about how we offer it too. For us, everything is about flow, whether it’s issuing invoices or policies, and to do this successfully, we need to always have the right technology to hand. It is why having strong IT systems is a key priority for us. These systems help us to grow in present times, by allowing us to offer speed of service, but they’re also vital for helping us to maintain an adequate financial margin through productivity gains.
One such area of interest is professional liability lines. France has plenty of activities that are regulated, making this an area of huge potential for us. Through our experience of working with wholesale brokers with small limits and small premiums in other markets, we know the online opportunities this presents - and we want to replicate this success in France.
For now though, our focus will be to continue to be reactive, to offer a dedicated service, and to help our clients get the cover they need.
If you are interested in working with us, please get in touch to find out more.