The underwriting margins of major European commercial insurers are expected to peak in 2024 and subsequently decline, according to Fitch Ratings. In the report, experts observe that high underwriting losses caused by high claims inflation, insufficient reserving and the Covid-19 pandemic have led to global price increases for 25 consecutive quarters. High underwriting margins and progressively supporting investment income in 2023 fuelled the market's upward correction from 2021, resulting in high profitability for the industry. Fitch anticipates the profit surge will increasingly attract additional capacity, leading to more intense competition. As a result, it will further slow price momentum, causing the commercial insurance market to soften in 2025. The agency notes that risks related to social inflation, climate change and cyber security remain key challenges for the sector. European insurers are advised to maintain vigilance as the risks are constantly evolving and structurally growing.
