REFILE-Aegis predicts PVT softening through 2025 if no major loss

By Michael Jones

March 5 -

• PVT insurance market sees increased capacity, limited losses, Aegis executive says

• Aegis London's MacDonald says underwriters focus on deductibles, cautious on larger line sizes

• Rise in sabotage events in Europe linked by some Western officials to Russia

Political violence and terrorism (PVT) insurance is expected to soften until at least the end of 2025, Aegis London’s James MacDonald told The Insurer, as limited losses in the market over the past year had combined with an influx of capacity.

“I would have thought that, just purely because of the capacity supply dynamic, we'd still be in a negative rating environment at the end of the year if there is not a large loss to the PVT market,” the Lloyd’s focused insurer’s class underwriter for war and terrorism said this week.

The PVT market has seen a flurry of entries in the last 12 to 18 months, including include Aviva’s Lloyd’s offering through Probitas 1492 and MGA Crux Underwriting, alongside increased appetite from incumbent players.

Heightened capacity has meant that many underwriters, unless affected by losses in specific geographies, have had a very limited ability to change the dial on rating, said two PVT market sources.

MacDonald said underwriters were placing more focus on deductibles and increased caution in placing larger line sizes, particularly for traditional sabotage and terrorism-only business after an increase in attacks on critical infrastructure in Central and Eastern Europe over the past year.

Western officials have said that sabotage events by suspected Russian-paid operatives, which include a number of parcel explosions at logistics depots, have risen sharply in Europe since the start of 2024. Russia has regularly denied any involvement in these activities.

“If we've got organised criminal groups or Russian-affiliated criminals or even Russian state employees running around Europe … committing basic acts of arson against high-profile companies from rival NATO or EU nations, then it means that risks that are traditionally thought of as benign and safe to insure aren't any longer,” MacDonald said.

Despite a changed risk environment, MacDonald reaffirmed that there had been no change to rating and that the realities of the market meant this was unlikely to change imminently.