Property & Casualty insurers expect 2022 to be a stronger year

While the primary insurance market is stable, the growing world of cyber security is helping to drive the need to develop new insurance solutions, says Aon plc. 

In its fourth-quarter 2021 highlights for Canada, Aon says the primary casualty market is stable and well performing. However, the excess market is challenged in highly exposed classes, hitting renewals and new capacity requirements. 

Cyber security claims remain challenging 

When it comes to cyber security, market conditions remain challenging, says Aon. A lack of proper actuarial modelling from the outset of the cyber marketplace has led to historic under-pricing. Now, as more claims are paid by insurers, better claims data is developed, which is leading to more accurate models reflecting higher pricing. 

There are signs of stabilization in the property insurance area. Some rate pressure and capacity issues continue, however, particularly for complex and/or natural catastrophe-exposed risks. Well-performing risks are experiencing modest rate increases. 

Profitability issues, combined with ongoing concerns related to the impacts of COVID-19 on some sectors, continue to create a challenging market environment when it comes to directors and officers insurance, says Aon. There is also a heightened focus on the ability of companies to deliver on their ESG commitments. Canadian market trends are lagging behind those of the U.S., with 2022 expected to be the third year of rate increases in Canada. 

Canadian market expected to do better this year 

"The Canadian insurance market will continue to climb out of the hard market in 2022," said Russell Quilley, chief broking officer for Canada at Aon. "With many of the insurance carriers looking to grow in 2022, this additional pressure will translate to more favourable terms for clients." 

Internationally, the uncertainty from the COVID-19 pandemic has largely subsided and volatility has stabilized – with the notable exception of cyber products, says Aon. The recovery in certain economies, industries and organizations continues. For example, among C-suite leaders and senior executives across several industries surveyed in September 2021, nearly 90 per cent in North America and Europe expected business conditions to be stronger in a year.