Q1 Automobile Summary
Overall (Moderate)
The market has become more complex due to a general increase in claims costs across the automobile insurance portfolio. This has been driven by a lack of vehicle manufacturing supplies such as metals and semiconductors which has pressured used vehicle pricing, as well as high inflation that has increased the average cost per claim. In addition, the elevation of fuel prices has directly affected negotiations between insurers and 24-hour assistance partners, which has further pressured terms and conditions.
Pricing (+1-10%)
Rate increases have been modest; however, due to rising exposures driven by escalated vehicle costs, overall pricing has been moderately up.
Capacity (Ample) Capacity has been sufficient for standard vehicle risks but somewhat constrained on truck exposures due to poor performance in 2021. Some insurers have withdrawn from writing transportation, sugar cane mills, rental and supermarket risks.
Underwriting (Rigorous) Insurers have become more cautious and conservative, especially on new business, while demonstrating some flexibility in retaining in-appetite, well-performing risks.
Limits (Flat) Limits have generally been stable, although additional limits could be achieved in some cases.
Deductibles (Flat) Expiring deductibles could be achieved in most cases, but some increases have been mandated.
Coverages (Stable) Expiring coverages could be achieved in most cases.
A Look Ahead (Moderate) Current market conditions are expected to continue as price and appetite adjustments are a mid- to long-term strategy. In addition, oil, metal and semiconductor challenges are expected to continue which will have a further negative impact on market conditions.
Q1 Cyber Summary
Overall (Challenging)
The market has been challenging as insurers have reviewed their terms and conditions, reduced capacity, and required extensive underwriting information. As demand for this coverage has increased, insurers have been faced with an influx of underwriting submissions and as a result, response times have slowed.
Pricing (>+30%)
Driven by ongoing poor Cyber portfolio performance, insurers have continued to impose severe rate increases.
Capacity (Flat) Following capacity adjustments made during 2021, capacity has now stabilized.
Underwriting (Rigorous) Underwriting stringency and rigor continued to strengthen and there has been virtually no underwriting flexibility.
Limits (Flat) Expiring limits were achieved in most cases. Many insureds have requested higher limits; however, they have been difficult to achieve unless strong controls can be evidenced.
Deductibles (Increased) Deductibles have increased significantly, not only to address loss frequency and severity but also to adjust for currency fluctuations. Waiting periods for Business Interruption have also increased.
Coverages (Stable) Expiring coverages were achieved in most cases, although ransomware remains under scrutiny.
A Look Ahead (Challenging) Insurers are expected to become more demanding with regard to their requirements for the implementation and maintenance of proper cyber controls such as Multi Factor Authentication, Backups, Incident Response Plans and Disaster Recovery Plans, employee capacitation, and patching policies. Evidence of these controls is expected to become a requirement for receiving a quote.
Q1 Employers Liability/Workers Compensation Summary
Overall (Moderate)
The Brazilian judicial system has, in general, been taking tougher stances, including increasing indemnity requirements payable to victims and their families. This change, combined with adverse loss experience, has led insurers to approach Employers Liability coverage (either stand-alone or, more commonly, as an extension of Liability policies) with caution and conservativism. To address rising loss costs, most insurers have proposed increasing deductibles in order to avoid more significant rate increases.
Pricing (+1-10%)
Pricing has increased modestly for most industries while the construction, mining, agricultural and steel industries have experienced more significant rate increases.
Capacity (Abundant) Capacity has remained abundant; however, some insurers have limited their exposure in poor performing industries.
Underwriting (Prudent) Underwriting has been conservative and cautious.
Limits (Flat) Expiring limits were achieved in most cases; however, some insurers have limited their exposure in poor performing industries.
Deductibles (Increased) Deductible increases were common, and there has been a trend to apply them on a per victim rather than per event basis. In some cases, insureds have opted for deductible increases to help offset rate increases.
Coverages (Stable) Expiring coverages were achieved in most cases. There has been minimal flexibility or willingness to remove restrictions related to underground or underwater works, or construction workers (tunnels and/or dams).
A Look Ahead (Moderate) Current market conditions are expected to continue.
Q1 Trade Credit Summary
Overall (Moderate)
Despite growing uncertainty in anticipation of the 2022 governmental elections and their impacts, the insurance market has remained relatively stable, with moderate pricing and underwriting conditions.
Pricing (Flat)
Pricing moderated in H2 2021 as COVID-related losses did not materialize as expected. This moderation continued into Q1 2022. Flat renewal pricing was achieved in most cases.
Capacity (Ample) Capacity has been sufficient to meet most market demand; however, there has been very little appetite or capacity for retail risks.
Underwriting (Prudent) Underwriting has become more rigorous and conservative as uncertainty related to the geopolitical events in Eastern Europe, and the 2022 elections, grows.
Limits (Flat) Limits remained generally flat, with the exception of risks with exposure the to the geopolitical events in Eastern Europe.
Deductibles (Flat) Expiring deductibles were achieved in most cases.
Coverages (More Restrictive) While standard coverage terms remained stable, there has been a notable contraction of coverage related to the geopolitical events in Eastern Europe.
A Look Ahead (Moderate) Uncertainty surrounding the geopolitical events in Eastern Europe and the upcoming elections will remain high, leading to ongoing conservativism in underwriting and coverage terms. With the release of data related to 2021 consumer trends, the already challenged retail sector is expected to face even greater difficulties securing coverage and limit. The business impacts of the geopolitical events in Eastern Europe are already apparent for agribusiness risks, as costs of fertilizer and some commodities rise. This situation is exacerbated by the devaluation of local currency. As a consequence, the insurance market for agribusiness risks is expected to become more challenging.
Q1 Casualty/Liability Summary
Overall (Moderate)
While market conditions have generally been stable, some industries and poor performing risks have experienced underwriting stringency, a contraction of coverage, as well as increased premiums and deductibles.
Pricing (+11-30%)
Rate increases have been common, the extent of which has varied based on industry, loss history and the need for facultative reinsurance. Risks in the warehousing, transportation, manufacturing, construction, mining, energy, and highway industries have experienced the most challenging pricing environment especially due to the long tail loss record of the local market.
Capacity (Abundant) Capacity has been abundant; however, some insurers have limited their exposure in poor performing industries.
Underwriting (Prudent) There has been a strong focus on profitability, which has driven underwriting discipline and rigor. Underwriting discussions related to Product Recall and Product Liability have often been challenging. More detailed and rigorous information has been required.
Limits (Flat) Expiring limits could be achieved in most cases.
Deductibles (Increased) Deductible increases have been common, driven primarily by insureds seeking to manage premium costs.
Coverages (Stable) Coverage terms have generally been stable; however, some contraction has occurred for Product Recall and Product Liability for automotive, raw material, chemicals, pharmaceuticals and food and beverage risks.
A Look Ahead (Moderate) Current market conditions are expected to continue.
Q1 Directors and Officers Summary
Overall (Challenging)
The market environment has been challenging due to recent losses which diminished local authority necessitating greater involvement of global insurers. Pricing increases have continued, especially for listed companies which have faced significant increases and have also experienced deductible pressure for Side C coverage. Capacity has remained available, the amount of which has depended on risk exposure and layer position, with higher excess layer capacity more readily available. Brazilian companies that are listed in the US or that have ADR programs in the US have been experiencing the most challenging market environment.
Pricing (+1-10%)
Rates have varied depending on risk exposure, claims history and adjustments made at recent renewals. Listed companies have been experiencing the highest rate increases.
Capacity (Constrained) Due to recent losses, Brazilian insurers have been highly cautious in deploying capacity, and as a result capacity has contracted. Capacity has largely depended on criteria such as: (i) listed companies with US exposure, (ii) claims history, (iii) bankruptcy or judicial reorganization process, (iv) financial institutions, (v) healthcare companies.
Underwriting (Prudent) Underwriters have become more cautious and as a result, the underwriting process has been more time-consuming than it has been in the past.
Limits (Decreased) Expiring limits have been achieved but in some cases, at a higher cost, given the increased reliance on – and higher cost of – international capacity. Publicly traded companies have experienced the most challenging conditions as they sought to avoid limits reductions.
Deductibles (Flat) Expiring deductibles were achieved in most cases while listed companies, especially those with US exposure, experienced significant Side C deductible increases due to poor loss experience driven by class actions.
Coverages (More Restrictive) Coverage restrictions and exclusions continued to be imposed for COVID and Cyber risk, with very little flexibility to negotiate.
A Look Ahead (Challenging) Current market conditions are expected to continue. Underwriting information will become even more crucial as a differentiator and to provide better understanding of risks and exposures, allowing for better terms and conditions as well as access to capacity.
Q1 Property Summary
Overall (Moderate)
Market conditions have varied widely by client industry, loss record, exposure type, risk management maturity, and whether there is local underwriting authority. More restrictions and some price increases have arisen as a result of some insurers’ recent treaty renewals. Conditions have remained challenging for complex and high hazard risks such as energy, heavy chemical, pulp/paper, and logistical warehouse, especially when high limits have been needed and local capacity has been insufficient. Lighter risks have remained moderate in terms of underwriting and available capacity.
Pricing (+1-10%)
Modest rate increases have continued for high hazard and/or complex risks, driven by a lack of local capacity, global insurer guidelines and reinsurance pressure. Some key insurers have shifted their appetite and participation, reducing capacity and driving up costs.
Capacity (Ample) Insurers have implemented capacity management strategies to reduce exposures in some complex and high hazard risk types.
Underwriting (Rigorous) Local underwriters have remained cautious and stringent, and have required extensive information and risk management improvements. Recent survey reports for complex and high hazard risks have been mandated.
Limits (Flat) Expiring limits were achieved in most cases.
Deductibles (Flat) Expiring deductibles were achieved in most cases; however, some poor performing risks experienced mandatory increases aimed at controlling insurer exposure. High hazard and complex risks have also been subject to global guidelines, which may require deductible increases. In some cases, insureds have been electing to increase their deductibles to help offset price increases.
Coverages (Stable) While coverage has been stable overall, negotiations have become more challenging related to Strikes, Riots, & Civil Commotion, Contingent Business Interruption and Natural Catastrophe coverages as a result of poor loss experience in these areas.
A Look Ahead (Moderate) Current market conditions are expected to continue. Robust, detailed underwriting information will be even more crucial as a potential differentiator, to help elevate underwriter risk confidence and achieve better placement results. Starting the placement process early will remain essential.
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