October marks the start of the renewal season but in reality doesn’t provide many significant renewals. Despite a clamour for indications for the rest of the final quarter the early renewals have not offered much of a change as market conditions remain consistent. The loss environment is benign, there is abundant capacity and exposures continue to grow.
Recent months also brought little in the way of major renewal activity and the trend of single digit premium reductions against single digit exposure increases continued. The early October renewals have seen the premium reduction creep into the low double digits for the first time this year.
2012 Net % Premium & Exposure Movements (Hull & Liability)
There are just three major October 1st renewals; NACIL, Allegiant and Fuji Dream with a further nine in the remainder of the month. The October 1st renewals are perhaps therefore only significant as they offer the next obvious attempt for brokers to test the tolerance of the market and it is this tolerance that is key to understanding the remainder of the year.
Undoubtedly competition in the market remains high. Theoretical capacity levels are in excess of 225pct for the perfect risk but the level of working capacity being deployed by Insurers is the key factor. The level of losses is so low that all predictions are to a slight acceleration of the level of premium reduction being achieved. We expect this to develop as the market builds to the final few weeks of the year and focus heightens on the significant premium volume that renews.