P&C brokers can expect to gain access to new capacity to cover risks in the second half of the year.

Aon makes this forecastin its Insurance Market Report Canada mid-year 2021 review. “New capacity is likely to enter the market in the second half of 2021 through insurer start-ups, reinsurance capacity and shifting insurer appetite” the report reads.

The professional services firm adds that the environment posed by the COVID-19 pandemic has accentuated the more rigorous approach to underwriting that insurers took a few years ago, “which has helped them manage through a period of unprecedented uncertainty, even while they are investing in innovation to strengthen – and in some cases reinvent – their businesses for the long term,” Aon explains.

Aon sees signs of market stabilization, and says that insurers are beginning to position themselves for growth and profitability, despite the challenges posed by the pandemic.

Taking advantage of the recovery  

Many of last year’s challenges are persisting into 2021, Aon says, including poor underwriting performance and uncertainty related to the pandemic, combined with the risks of social unrest and social inflation. The rollout of COVID-19 vaccines should help restore economic stability, the firm adds.

“Looking forward, as the world emerges from the impact of the pandemic, it is crucial that industry players take a proactive stance to address the opportunities and challenges that the next few years will bring,” says Russell Quilley, Chief Broking Officer for Canada at Aon. “Starting early on the renewal process, positioning programs with a focus on the long term and being ready to make strategic changes are vital steps insurers can take now towards preparing for when the market turns.”

Despite encouraging signs of the recovery, Aon notes that many insurers reported operating losses in 2020. “It might take several renewal cycles before the full impacts of COVID-19 are clear. Underwriters remain cautious as they continue to tighten some terms and conditions and/or offer less capacity. With a high volume of submission activity industry-wide, some are overwhelmed,” the report continues.

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