Insurance premium rates are still on the rise. Yet a major brokerage firm sees signs of an imminent slowdown.
In its mid-year Insurance Market Review, Aon says the Canadian insurance market remains challenging for many manufacturing industry players. Rate increases in the liability market are surpassing those seen in the property market over the past two years, the report points out.
All the same, the brokers see a light at the end of the tunnel. “The manufacturing market is still seeing rate increases across a majority of lines. However, there are signs of slowing, with lower rate increases depending on the client’s exposures and loss history. The exception is that D&O, liability, and cyber risks continue to see substantial rate increases.”
Aon brokers also mentions that they are increasingly proposing alternative financing options to their manufacturing clients to offset rising premiums. Interest in setting up captive structures is growing as well, they say.
The problems in the manufacturing insurance market do not end there. “Reduced capacity in the umbrella and excess liability market has resulted in premium increases and/or lower limits available for purchase. Minimum premiums for many excess markets continue to increase. In many cases, there has been the need to add new insurers and additional excess layers,” Aon brokers explain.
Exclusions for communicable diseases
A new issue is also emerging in connection with the COVID-19 pandemic. “With several manufacturers retooling to assist with COVID-19 related operations, many insurers are mandating communicable disease exclusions, but there are a few who are underwriting the exposure to determine if an exclusion will be necessary. As such, the need for clear protocols and measures to manage this risk can have an impact on underwriting decisions," Aon brokers warn.
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