The London Market has big plans in sustainable energy, as it is revealed as the standout growth class for insurers in 2023.

This is among the findings of broker Howden's annual London Market Appetite Survey, which assesses underwriting appetite by line of business. It reflects a bullish appetite for this class, with the majority of insurers planning for double-digit growth, mainly driven by new business, rather than rate.

This year’s results also reinforce the impact of global economic and geopolitical events, with the latter being a driving force in the growth achieved by PV and terrorism and war classes. Having experienced years of rate decreases, the war in Ukraine has led to expectations of another year of rate increases, with the average estimated RARC being close to 20%.

New types of cyber attack, the ambiguity of war exemptions and debate surrounding what is considered as a ‘political attack’ will likely continue to complicate this line of business and may create a greater connection between the PVT and cyber market, according to the report.

This year’s survey estimates that rate increases in cyber will be close to 15%, following further capacity entering a competitive market. A reduction in ransomware activity, an improvement in loss ratios and an increase in capacity are converging to create a more stable environment – for now.

Meanwhile, appetite for North American property remains as muted as it was the year prior. That said, rates are are expected to increase by an average of 14%, with some carriers even predicting a 30% rise. For US CAT business, respondent appetite is equally as muted with an average estimated RARC of 50% for 2023. Only two insurers provided a high appetite score for US CAT, potentially looking to take advantage of favourable pricing conditions.

Author of the report Paul Cumberland, executive director, Howden Markets Consulting said: “With the relatively modest rate increase anticipated for next year across the market place as a whole, it is tempting to think that we are now in a ‘soft market’, however really it is the rate of rate increase that is slowing and that many classes are peaking in terms of rate adequacy.”

The survey of 43 insurers was conducted in December 2022 and comprises a mixture of Lloyd’s syndicates and company markets.

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