Conditions within many of the the insurance sectors are ‘challenging’, according to the latest Markets Dynamic report from Aon.
The report specifically pointed to four sectors—casualty and liability, cyber, property, and employers liability and workers’ compensation—are being in ‘challenging’ or ‘very challenging’ circumstances.
In regards to casualty and liability, Aon said: “The Casualty/ Liability market remains challenging, as underwriters reduce their lines, ventilate layers, increase pricing, and tighten terms and conditions.”
Cyber, the insurer continued, is ‘very challenging’. This is because, it wrote, “As ransomware incidents continue to increase, insurers are implementing more stringent underwriting approaches resulting in a reduction in available capacity.”
Property is also challenging, and remains so because of rate corrections across the board.
Aon added: “However, where previous corrections have been applied the current, additional increase is moderating. Appetite and competition is expanding for certain sectors and/or where risk management progression can be evidenced. Early preparation, insurer engagement, robust information and contingency plans remain the recommended foundations of a successful strategy in this market.”
For employers’ liability and workers’ compensation, market conditions were challenging because of claims inflation, rate increases, and continued uncertainty around Covid.
The predicted outcomes for the sectors vary, said Aon. While casualty and liability market conditions are expected to stabilise, the challenges around Cyber are expected to continue.
Aon wrote: “A challenging Cyber marketplace is expected to continue, with price increases and restricted capacity. Insurers’ primary concern will be systemic risk and aggregation exposures / managing the impact of a single event on their portfolio. Insurers are expected to take further actions to manage this in 2022.”
Current trends, said the insurer, are expected to continue within property. It wrote: “[These] will be influenced by the outcomes of treaty renewals, adverse loss experience, and emerging factors such as claims inflation. Moderate rate increases are expected to continue where rates have previously been corrected. Risks with lighter occupancies, strong risk management and detailed information will likely drive competition and outperform the “average” conditions. Capacity is expected to be sufficient for most risks, although heavy industry occupancies will remain challenged. Early planning, robust, timely response to information demands, insurer engagement and alternative programme design remain the recommended foundations of a robust broking strategy in this market.”
Aon said that market conditions within employers’ liability and workers’ compensation are expected to continue ‘well into 2022’.
