21 March 2013

CRE: Flattening Swedish market set fair as new insurers eye entrance

Swedish risk managers and brokers do not expect their local market to harden over the coming year but rather maintain the flat-to-mildly-soft conditions witnessed at recent renewals.

Possibly barring nat cat risks that are feeling some pressure, they believe that with plentiful capacity in the Swedish market, and new insurers poised to enter the fray, conditions will remain stable for the foreseeable future. But they concede that the acutely soft market conditions of the last few years may now be over.

"For risks with a good claims history rates are still under pressure downwards if marketed properly on a broad basis, but as a general statement, rates are flattening rather than decreasing at the moment", said Johan Forsgård, Chief Executive Officer at Willis Sweden, on the local market.

"In Sweden I wouldn't expect any real changes. We have seen some signs of increasing rates, but in general, if a carrier decides to increase rates there tend to be other markets that will take on the risk at the expiring or slightly lower rate levels", he added.

For his part Fredrik Finnman, Swerma's President and Group Risk and Insurance Manager at ASSA ABLOY, said the market has leveled off but remains soft in places. "Partly because Swedish multinationals have a good reputation for risk management and for taking good care of assets and their business. But also the insurers (here) tend to do good underwriting and have a good product diversification."

Lennart Edström, Vice President of Group Risk Management at Electrolux, said he expects the market to remain flat over the coming year with no signs of it hardening. This is in part due to over capacity in the market, which is going to be boosted by new market entrants, he added.

"It is easy to find insurers who say that pricing will go up and they have been saying that for a number of years but it simply has not happened. If you look at the Nordic region we have over capacity here. We see that Swiss Re are entering the market and there are rumours that Munich Re wants to come in to the market on the direct side. So we see an inflow of capacity, so how will they be able to raise the premium unless they have a lot of losses. Unless this happens I think we will see a stable market. I don't think rates will go down much-I expect it to remain quite stable", he told Commercial Risk Europe.

The risk managers also mentioned that although the Swedish market is not as soft as it once was, placing risks locally is often far cheaper than in competing markets. "We used to place some insurance in the UK and the US but when we move those placements to Sweden we still tend to get 20 per cent to 30 per cent price reductions," said Mr Finnman.

Mr Esbjörnsson agreed: "I still feel for our purposes the Scandinavian market is cheaper than London or the European markets. So in those other markets cover for construction and construction liability risks still can come down a bit."

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