The management liability market has come under substantial scrutiny in recent months, and the COVID crisis has led to many insurers undertaking strategic reviews of their product lines in the face of a hardening market. It is following such a review, that AXA XL has confirmed that it will be withdrawing from the management liability and financial institutions business in the London market.
In a statement sent to Insurance Business, AXA XL said: “Following a strategic review and, in light of our ongoing concerns around the level of claims, pricing and profitability, we intend to cease underwriting management liability (ML) and financial institutions (FI) business in the London Market. This only applies to ML and FI business underwritten in the London Market. Our FL business in the Americas, APAC and Europe remain unaffected by this.”
AXA XL also revealed that its colleagues, clients and brokers who will be impacted by the decision were first informed midway through last week.
This is not the first news of its kind that has shaken the professional risks market in 2020 with Liberty Insurance dropping its commercial liability business in Ireland, and a recent market update by Marsh JLT Speciality revealing that the average increase in directors’ and officers’ (D&O) insurance premiums for FTSE 350 companies in Q2 2020 was nearly 200%.
The report highlighted that this was caused by insurers becoming increasingly concerned not just with historic sources of D&O claims, but also with new exposures that may result from COVID-19.
Marsh JLT Specialty stated: “In addition to the general market correction based on increased claims costs, COVID-19 has led to insurers further rationing capacity, with many reducing line sizes on their renewals. Others have paused taking on new business while uncertainties around the pandemic remain.
“This has created a squeeze on capacity, with holes opening up in programmes and a limited number of insurers willing to fill the resulting gaps. This has exacerbated an already difficult pricing environment.”
The difficulties facing the market are widely recognized and, when welcoming Nicky Stokes as the new head of management liability and financial institutions, New Dawn Risk CEO, Max Carter, highlighted that, with rates increasing dramatically in all regions for D&O and financial institutions insurance, “clients need experienced brokers to ensure that they are getting the best possible results in an extremely challenging environment.”