A new State of the Market Report by specialty insurance brokerage and risk management firm, Risk Strategies, has warned clients to settle their re/insurance negotiations as early as possible, ahead of an anticipated shortage of capacity at the upcoming January renewals.
CEO John Mina noted that businesses face an uncertain economic outlook and unprecedented disruptions in the insurance market at present.
These include new risks, shifting assumptions, and uncertain macroeconomic conditions, with inflation and rising interest rates driving higher prices and negative impacts to earnings.
At the same time, catastrophic weather events are occurring with higher frequency and severity, challenging underwriting models, pricing, and capacity, and Hurricane Ian may turn out to be the most expensive storm in Florida’s history.
And many firms are also dealing with social and behavioral shifts such as changing workforce expectations, rising claims court and litigation costs, and overall shifts in attitudes.
Against this backdrop, businesses have experienced hard markets throughout the past year, Risk Strategies reports, most notably in Cyber, Property, Excess Liability, Directors & Officers, and Auto insurance lines.
For most lines of insurance, rate increases are expected, and especially so for businesses with an unfavourable loss history and for those in catastrophe prone zones.
The report also highlighted the ever-growing threat of cyber-attacks and ransomware, and suggested that cyber will likely remain challenging in the short term, despite some recent signs of rates slowing.
“Now more than ever, clients should get out into the market early since we expect a race to find capacity as 1/1/2023 nears,” the Risk Strategies report stated.
Looking ahead, Risk Strategies did maintain some points of optimism for economic prospects, including job growth, historically low unemployment rates, and strong business earnings in many sectors.
Sustained rate increases have attracted some recent new entrants, creating opportunities for those that have capacity and brokers who can access it, it noted.