Supply chain issues, inflation, and costs for transportation, raw materials and labor continue to present challenges for companies in the U.S. Some industries have benefitted from these hurdles with revenue and margin growth, while others continue to — or have begun to — see struggles. In all of this, the Product Recall marketplace has remained stable due to the multiple entries of new markets in the last two years. With pandemic restrictions behind us, we're seeing a very competitive market despite increased regulatory activity and the return of some sizeable losses and more frequency.
What does all of this mean for insureds? Well, as of now, markets continue to be reasonably aggressive on accounts with favorable loss history — especially those whose operations fall into the primary appetite of underwriters. On the other hand, companies doing over $2 billion in revenue, tougher classes of business and/ or those with loss histories notable for frequency or severity are seeing more underwriting caution than this time last year. Stiff competition still exists amongst markets to grow their books in an increasingly congested market; however, some newer markets remain more cautious about where they are looking to deploy their capacity (as is expected).
Of the roughly 25 markets focused on product contamination and recall in the U.S. and U.K. (excluding those who deploy capacity on both sides of the pond), only about 60% were actively participating in the market prior to 2020. To be clear, the vast majority of these "new" markets are new companies to the Product Recall market, yet are run by experienced underwriting teams. These new entrants into the market are a benefit to insureds from the perspective of competition, but also comes with justified hesitancy for some of the riskier companies mentioned in the previous paragraph. Despite increased regulations, losses and other concerns, the market is in great shape for buyers until January 1, 2023 — and potentially beyond that depending on the reinsurance renewals.