Global professional services firm, Aon plc says the impact COVID-19 claims will have on insurers has not yet been fully seen, adding that costs are likely to increase, and it expects heightened underwriter scrutiny on supply chains, communicable disease safety measures and cyber threat resilience going forward.
The results of its Q4 2020 Global Markets Insights Report include findings that insurance pricing is up across most lines and classes globally, as COVID-19 impacts, including economic downturns, have resulted in heightened underwriting scrutiny and risk aversion from insurers.
The report examines a number of countries internationally, along with global claims and reinsurance trends and health trends. In looking at Canada, the firm says after contracting 5.4 per cent in 2020, the Canadian economy is expected to rebound in 2021. “The pandemic is the major driver of the economic slump and the driving force for insurance market changes,” they write. “Interest rates have fallen, dragging down investment income and overall insurer profitability. As a result, pricing is rising, deductibles are increasing and capacity is contracting. Coverage limitations are being mandated by some insurers and subjectives are being required where they have not been in the past.”
Globally, they say the upward pricing trend will continue well into 2021.
“Pricing will remain challenged, although there is general optimism that, with the rollout of the COVID vaccine and the introduction of additional capacity into the market, the current challenging conditions may temper,” the report says. “Coverage clarification will continue, especially for communicable disease and cyber. The risk environment is exacerbated by supply chain vulnerability, increased working from home, and by ongoing economic uncertainty and weather volatility. Innovative technologies for automation and digitization will become investment priorities for the industry.”
