2022 Insurance: Softening on price. Still hard on risk.

Inflation has been the dominant topic in the past year. All insurers have compensated for inflation. There is a general acceptance for index among Clients.

• Property 7-14%. Real Estate on the high end. Commercial/SME on the lower end.
• Motor 3-7%. Electrical vehicles relatively high. Normal fleets lower.

Nordic incumbents are still rational. They don’t compromise on risk quality but they compete on price for good risks. UK seems to be ahead of the Nordics in the cycle and is generally softer. This time may be slightly different. Indications are that data requirements will be maintained for longer.

In insurance, time required for cleaning is proportional to the time spent messing up. Some realities do not change. Large losses occur. An insurer has to understand the large loss exposure and make sure to get paid for it. It is stupid to write a lot of business before you have enough data to quantify the large losses. You will suffer for long.

My hope for the coming years is that portfolios are cleaned but memories are not cleared. Underwriting should incentivise risk management and control. Requirements on data and risk control will make clients improve and deserve better terms.

Protector will continue to make necessary requirements forever. The poor profitability we had 2018-2019 is a good experience because we are able to capitalize on it. Even a huge mistake will be good for the bottom-line when you learn and you have a long perspective.

To one of the most important aspects of our business. The Nordic brokers are still being consolidated by PE firms. Their agendas are of great benefit to Protector. Structuring their Commercial and SME-business to improve value chains. Growing into private lines. Employing insurer sales people to boost organic growth.

Protector has won several new Broker Facilities in all Nordic countries during 2022. We have strengthened our position as the market leader on the segment. Premium volume has grown about 30% and will pass EUR 130m during the year. Growth potential has increased a lot.

Clients’, Brokers’ and Protector’s interests are aligned in this development. Clients and Brokers get better terms. Incumbents are losing some of the super profit margin on customers that have been to small to tender effectively before. Incumbents play defence which is likely to be their best option. One huge insurer is even reputed to be considering to stop doing SME business with brokers.

Protector has provided capacity to support Brokers on large loss exposures during the year. We have continued to quote selected coinsurance programs. We have offered innovative solutions to Clients that can’t get insurance on normal terms. If the market continues we will spend more time and resources on such opportunities next year.

Our market share development is good but we should have performed better in the hard market. The Nordic market in Protector’s current segments is around EUR 4,2 bln. Our market share is around 11%, lower in Denmark and higher in Norway and Sweden. In UK we have below 2% market share and hence a very long runway.

Brokers growth into segments with smaller customers has great potential to increase the market potential on long term. They have client relations through other products, employers and organisations. If we look to Europe there are several markets where brokers have a substantial market share of private lines.

The underlying realities in Protector are very good and we can focus on profitable growth. All countries are growing and basically all segments are profitable. That has not been the case since they started the international expansion from Norway in 2011.

2022 Q1-Q3 Combined Ratio was 87,9%. Growth 15% in local currencies. Churn is around 15%, inline with our long term average. Price increases between 7-8%. That is higher than inflation on portfolio level. New sales are exceeding NOK 1 bln the first three quarters.

The teams are performing well on our internal KPIs. In Norway we haven taken back the #1 position in a big way, winning close to all important broker awards. Denmark gets a lot of positive feedback and Sweden is steadily improving. In UK we are defending our #1 position on broker satisfaction, every year since we started measuring in 2016.

We have potential to learn from each other in our One Team. We have all succeeded but in different ways. UK has built a very strong Risk Management practice and offering. The Nordics is great on Broker Facilities and Affinity structures. All will benefit from strengthened cross border functions and relations.

Please note that decisions will be made locally as always in Protector.