Aon's most recent report on the global insurance market confirms that the upward trend seen in the last quarter of 2021 is continuing in the first quarter of 2022.
The report discusses major P&C industry trends and provides insight into the state of the Canadian market.
This look at major macroeconomic trends highlights the uncertainties associated with geopolitical risk in Eastern Europe, commodity price inflation, declining global demand, and disruptions in global supply chains.
As in the previous quarterly report, Aon notes slow improvement in the insurance market, which has led to slightly favorable conditions for clients. It adds that insurers are generally managing the underwriting process more rigorously.
Overall, premium increases are being kept below 10 per cent. Capacity is sufficient, and coverage limits are being maintained, as are deductible amounts. Underwriting conditions are stable. The only exception is in Europe and the UK and the Middle East and Africa, where deductibles are rising.
Aon also points out that while there have been few judgments in this area so far, lawsuits against insurers for business interruption due to the COVID-19 pandemic will remain a concern for some time.
Canadian highlights
According to Russell Quilley, chief broking officer for Canada at Aon, “the Canadian insurance market will continue to improve slowly except for cyber, catastrophe-exposed risk and loss-driven accounts, which will remain challenging.”
In its summary of trends in Canada for the first quarter of 2022, Aon reports general stabilization in rates and capacity for casualty and liability. Some segments with higher U.S. exposures or poor loss ratios continue to be affected by rate adjustments.
“Umbrella and Excess layers have started to experience more competition, while Primary layers have been experiencing a more selective approach from insurers,” Aon says.
In cybersecurity, the general lack of sufficient controls and the wave of ransomware-related claims have driven up rates, reduced capacity and forced insurers to tighten underwriting requirements.
In terms of property, market conditions have improved in the first quarter of 2022. Insurers are becoming more open to certain segments, but continue to be somewhat conservative in their underwriting. Cost inflation is putting pressure on the value of insurable property, which is pushing rates higher, although increases are more moderate than before.
In Directors’ and Officers’ liability, Aon points to increased capacity in less risky segments. Areas with poor claims performance are still under pressure.
Life Sciences
The report underlines that the opioid crisis is having a notable impact on insurance coverage in life sciences sector. Manufacturers are accused of unfair marketing practices by claiming that these drugs pose a low risk of addiction, in addition to touting benefits while failing to disclose the medication’s risks.
Many manufacturers have agreed to settlements to end class action lawsuits. The most recent settlement involves four of the largest life sciences companies in the U.S. and amounts to US$26 billion.
