Casualty insurance has seen a decline in coverage and pricing in the first quarter of 2022, with both of them presenting potential challenges to the market, according to the latest Alliant report.
US insurance broker states that, while still early, the impact of COVID-19 and the war in Ukraine will likely have insurers review coverage definitions continuing a trend to narrowing or limiting coverage.
In addition to this, environmental, social and governance (ESG) concerns appear to be on the rise and could impact insurer underwriting decisions. The report also talks about an increased focus on clarifying or excluding chemicals, energy, communicable disease (COVID-19), abuse and molestation, and wildfires.
While pricing for worker’s compensation continues to be profitable, consistent and stable, auto liability remains unprofitable, and has seen a continued rate pressure in 2022.
According to the broker, pricing in the marketplace is competitive, showing slow increases driven mainly by loss severity. Umbrella and excess and market remains challenging with rate and growth in client being major price factors.
While coverage and pricing have seen a decrease, continues the report, retentions have remained stable with no changes, and although capacity has increased, it still faces potential challenges.
In this quarter, the report shows that capacity is still constrained for difficult risks; being readily available for less complex risks. Many insurers have indicated a focus on growth in 2022 with potential to open capacity for difficult risks, which will come with significant rate impacts which reflect the risk.
Finally, new insurer capacity continues to emerge, but not with lower rates, and very limited appetites. Auto liability capacity will continue to be limited, possibly seeing more insurers exit the marketplace. Reinsurance market remains capitalised, notes Alliant.