eThe property insurance market for European multinationals is either bending gracefully or teetering on the brink of a new downward cycle; it is not clear which from a report just published by the broker Aon. Its European Property Report 2003 states both that "underwriters are introducing a significant element of compromise - both on price and terms and conditions" and at the same time that underwriting discipline is firm across the board; rates, deductibles and retentions remain high and coverage remains narrow with terms and conditions tight.
Aon's research covered 11 European markets in the summer of 2003. Among the findings were:
The report concludes: "The continuing sober mood among underwriters, still mindful of past losses and starved of investment income, has so far been sufficient to hold the line against material rate reductions. But barring significant new losses to the major markets, a softer market environment is not too far away. The unspoken assumption is that some underwriters will soon break ranks with the more disciplined underwriting stance that has prevailed since 2001 and competition will begin to drag rates down again."