United Kingdom

A more stable UK insurance market but challenges remain for 2022

Aon’s latest Global Market Insights Report reveals rate increases have decelerated as insurers complete remediation work on their portfolios. But while factors such as increased competition and capacity should help in 2022, it’s still a mixed picture across all lines.


As 2021 draws to an end, three key insurance market themes – highlighted in Aon’s latest Global Market Insights Report Q3 2021 – dominate. First, it’s becoming clear that losses from the COVID-19 pandemic have not yet materialised to levels initially feared by (re)insurers. Second, the work by insurers to remediate their books to improve pricing adequacy and portfolio performance over recent renewal cycles has moved much of the focus towards growth. And third, current pricing levels – together with that improved portfolio performance – have led to an increased appetite in the market with new capital arriving from traditional and non-traditional sources. Together, these themes have combined to decelerate rate increases; a trend first seen in Q2 of this year, but one that has continued throughout the year.

How these factors are reflected in the wider EMEA and UK market reveals a mixed picture with insurance rates up between 11%-30%, underwriting proving stringent, deductibles increasing and coverages restricting, although there is ample capacity and limits are stable. There is less stress and more competition which can only be good news for buyers but those coverage limitations are a problem for poorly performing risk types and/or risks without robust underwriting information.

From a purely UK perspective, there is no one direction of travel across all classes. Some lines such as motor, property, casualty and even hard-hit D&O have stabilised but cyber continues to harden with a further deterioration in conditions expected. Taking a closer look at these lines reveals what buyers can expect heading into 2022.

Appetite for property grows

Starting with property, market conditions remain challenging with rigorous underwriting and rate corrections applied to most risks but with growing appetite and competition for risks where rate adequacy has already been achieved. There are some problems in heavy industry where appetite and capacity are limited, and that is expected to continue as well as for risks revealing a lack of investment or insufficient information. Insurer results and treaty renewals at the end of the year will be likely to influence underwriting strategies, pricing, capacity and coverage into 2022.

Casualty constraints

In casualty/liability, rates are up more modestly (1%-10%) than for property (+11%-30%), but there is perhaps more constraint on capacity – several insurers have reduced their appetite or withdrawn from the market altogether – although most risks are able to secure sufficient limit. Looking ahead though into 2022, the outlook is expected to remain challenging.

Cyber crisis

Issues in the cyber market have really come to the fore as the ransomware ‘pandemic’ has taken hold and significant rate increases are allied with capacity contraction, while ransomware clarifications and sub-limits have become common. It’s no surprise that the risk of cyber attack, has risen to the top of the top ten business risks as featured in the latest Aon’s 2021 Global Risk Management Survey.

Motor rates stable

For those in the automobile business, market pricing remains stable despite the increasing costs of parts and expenses related to technology components included in modern day vehicles. Rate increases are nominal in clean risks with the higher prices being paid by distressed risks. There are, however, some interesting dynamics that could influence next year’s renewals not least the UK HGV driver shortage, the rise of electric vehicles, and new expense strategies aimed at offering company cars in exchange for employee salary give-back; these all may serve to change risk profiles in 2022 and beyond.

Insurers cautious on financial lines

The market for financial lines is expected to continue to stabilise into 2022, but insurers will remain cautious, particularly when it comes to risk selection, capacity deployment and rate adequacy. Crime and pension trustees’ liability covers are likely to continue to be problematic. For professional indemnity, there are signs that the challenges have started to plateau and even though significant pricing increases continue, rate adequacy on more risks means the rate of increases has decelerated and buyers should start to see a slight improvement in 2022.

There’s more optimism too in trade credit following a rebound of the UK economy and a lower loss/claims environment than expected. 2022 however, will see a ‘normalisation’ of insolvencies, particularly with the recommencement of formal business insolvency procedures, inflationary effects linked to ongoing supply chain issues and rising commodity prices, as well as higher refinancing costs as interest rates are expected to rise which could impact the market.

UK uncertainty persists

Overall, there are encouraging signs for insurance buyers but high natural catastrophe losses and claims inflation could see further rate movement in the reinsurance treaty renewals in January, which in turn will hit primary markets. Against a macroeconomic backdrop of expected rising interest rates as the Bank of England looks to contain inflationary pressures, together with ongoing supply chain and labour shortages, the pressure will be on buyers to present their risks in the most favourable way to secure competitive cover.

For more of the latest detail and insights on the global and UK insurance market, as well as tips on how your business can navigate the challenges download Aon’s Global Market Insights Report Q3 2021.


Raoul Staff
Head of Broking Global / Head of Casualty London