According to the new Reinsurance Market Outlook by Aon, reinsurance market premiums are set to decline to varying degrees through 2020 due to the challenges of the COVID-19 pandemic.
In auto lines in particular, premium refunds have been widespread due to the reductions in miles driven under lockdown conditions.
Aon believes the macro impact in the US is mitigated at this point despite 15-20% reductions in premium, but noted that flat top line growth represents a considerable reduction to the double-digit growth seen in this space over the last two years.
Additionally, with e-commerce markets remaining strong in the pandemic environment, commercial auto segments associated with long-haul and point-to-point delivery are likely up on an exposure rated basis.
This helps offset the commercial and private passenger auto segments that are projected down due to reduced miles travelled, analysts noted.
In property lines, the main threat to premium volume is thought to be customer ability to pay, although business interruption claims coverage continues to be a major concern for commercial property.
The economic impact is expected to be variable by size of busines, meaning insurers focusing on heavily impacted segments (small businesses) may be experience larger reductions while those focusing on personal property or large/complex commercial may be relatively unimpacted on the top line.
Turning to casualty notable sectors include leisure and hospitality where the economic sector is down 5-10% for 2020, retail down 5-10%, and certain product liability segments (agriculture, manufacturing, and trade) down 0-10%.
Other specialised coverages, like D&O, E&O, and professional liability are hardening due to social inflation.
Aon also highlighted projected low double digit digit increases in workers’ compensation premiums, mainly due to the closing of non-essential businesses and high unemployment levels.
And finally, total premiums for the aviation industry will be down significantly on the back of reductions in ticket volume of potentially more than 50% for the year based on IATA estimates.