Fashion and Luxury Goods EMEA Insurance Market Insights

December 15, 2023 6 mins

Fashion and Luxury Goods EMEA Insurance Market Insights Q4 2023

Our Fashion and Luxury Goods EMEA Insurance Market Insights Report discusses the macro events that impacted the insurance market in the fourth quarter of 2023 in the Fashion and Luxury Goods Industry in EMEA.

Key Takeaways

The Property market showed signs of stabilization although Nat Cat risks remained challenged.
The D&O and Cyber markets continued to become more buyer friendly.
Underwriting was disciplined; robust and quality information gained further importance.

Fashion and Luxury Goods, like many sectors, experienced a pronounced evolution in 2023 shaped by the macroeconomic, geopolitical and social responsibility environments, amongst other factors. Big data offered new opportunities to understand consumer preferences and create customized experiences, while also increasing data privacy and security risks. Manufacturers and retailers faced increased scrutiny around “greenwashing” and consumer demand for sustainable products grew. Per- and Polyfluorinated Substances (PFAS) concerns mounted, and more brands committed to phasing them out while others accelerated their timelines. As business practices across the industry evolved during the year, so too did the risk and insurance environment. The market generally became more buyer friendly as insurers sought to meet their year-end budgets in an environment with sufficient capacity and sustainable pricing levels. While underwriting concerns related to risks associated with PFAS, US exposures, sustainability and “greenwashing”, supply chains, cyber maturity, and Artificial Intelligence (AI) are expected to continue into 2024, providing robust underwriting information and engaging early will enable clients the best opportunity to take advantage of the opportunities in the market.

Insurance Market Overview

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Expand the options below to read a summary of how the insurance market trended for Fashion and Luxury Goods clients in Q4 2023 across key lines of business, including Casualty/Liability, Cyber, Directors & Officers, Marine Cargo and Property.

Casualty/Liability

Favorable market conditions continued:

The favorable market environment continued as insurers sought to expand their Fashion and Luxury Goods portfolios; however, risks with North American exposures remained under increased scrutiny as insurers sought to manage the impacts of social inflation and “nuclear verdicts”.
PFAS (Per- and Polyfluorinated Substances) remained a key concern:

Underwriters were particularly cautious about PFAS exposures, especially related to fashion industry products and risks.

Cyber

Market conditions were more buyer friendly:

Despite an increase in some Cyber events, market conditions became more buyer-friendly throughout 2023, with flat Primary pricing and some price reductions available on Excess placements. Additional capacity was available as established insurers deployed larger line sizes, and new capacity continued to enter.
Appetite and underwriting was focused:

Despite generally more favorable market conditions, insurer appetite remained focused on risks demonstrating minimum criteria (multi-factor authentication, privileged access management, end point detection and response, etc.) Financial and long-term stability and a clear and transparent ESG strategy remained key areas of focus for underwriters.
Program improvements were available:

Insurers were amenable to considering coverage enhancements and limit increases as insureds sought to take advantage of current market conditions.
Insurers carefully monitored claims development:

2023 has seen the largest proliferation of ransomware attacks to date, and privacy claims related to biometrics and meta pixels (particularly in the US) have ticked up as luxury brands have sought to personalize their customer experiences through the gathering and processing of personal data and preferences.

Directors and Officers

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Competitive market conditions continued:

The competitive market trend that began earlier in the year continued as new insurers entered the market and some that had previously withdrawn returned. Price reductions could be achieved on most placements; however, underwriters remained prudent on USA-based risks.
Underwriting confidence strengthened:

Underwriting was flexible and coverage terms were negotiable. While economic conditions continued to raise concerns around discretionary spending, positive-trending indicators led to improved underwriting confidence.
Scrutiny continued for some risks:

Firms with short- to medium-term refinancing requirements remained under scrutiny as much debt is still at elevated levels relative to when the finance deals were initiated.

Marine Cargo

Moderate market conditions continued:

Modest levels of new capacity entered the market, increasing appetite and competition, although some insurers remained cautious and focused regarding their capacity deployment. Within the London Cargo market, appetite was limited for risks characterized by attritional losses.
Pricing was generally flat:

Well-performing risks experienced generally flat pricing while price reductions could be achieved on some risks that experienced exposure (e.g., total insured value) growth.
Coverage enhancements were considered:

Most placements renewed with expiring coverages; however, signs emerged that insurers were willing to reconsider exclusions imposed in 2019/2020.

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Fashion and Luxury Goods EMEA Insurance Market Insights Q4 2023

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Property

Market conditions moderated:

Q4 conditions followed the 2023 moderation trend. Price increases decelerated and capacity was sufficient for most placements, although capacity limitations continued on some risks.
Inflation remained a key consideration:

Underwriters sought additional details related to inflation and its impacts on insured values and insurance requirements.
Supply chains and interdependencies were scrutinized:

As materials and goods manufacturing continued to experience challenges, insurers remained focused on supply chains and interdependencies and monitored accumulations across suppliers and customers.
Nat Cat and US exposed risks remained challenged:

Higher-risk types experienced conservative capacity deployment, continued price increases, some underwriting delays, and coverage reviews.
SRCC concerns impacted appetite and coverage:

As Strike Riot and Civil Commotion-related events continued around the world, insurer appetite and coverage terms were negatively impacted.

The buyer friendly nature of the D&O and Cyber markets – together with ongoing changes in management and increasing digitization in the Fashion and Luxury Goods industry – appears to be an opportunity for greater choice and better decision making.”

Anika Spohn

Fashion and Luxury Goods Leader, Aon

The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

The contents herein may not be reproduced, reused, reprinted or redistributed without the expressed written consent of Aon, unless otherwise authorized by Aon. To use information contained herein, please write to our team.