Q1 Automobile Summary
Overall (Moderate)
Following a period of challenging market conditions, a transition has begun in the Commercial Automobile market, and rate increases have moderated from previous levels. Insurer appetite strengthened in Q1, and competition was healthy.
Pricing (+1-10%) Loss free risks experienced modest increases and insurers were open to negotiating options.
Capacity (Constrained) Capacity in the primary layers remained challenging due to claims experience in the market as a whole, and rising costs in the reinsurance market.
Underwriting (Flexible) As insurer focus on robust and detailed underwriting information has continued to strengthen, engaging underwriters in risk control discussions has become more important. This has provided an opportunity for insureds to help underwriters understand their business and become more confident in their underwriting positions, which has tended to yield more favorable renewal outcomes.
Limits (Stable) Excess insurers continued to push for higher primary Auto limits, typically requesting a minimum of $5M for third party liability.
Deductibles (Flat) Expiring deductibles were achieved in most cases. Increases were seen most often when there was a need to reduce the loss ratio due to frequency issues.
Coverages (Stable) Coverages remained stable, with the key exception of the January 1, 2022, shift in Alberta to a Direct Compensation for Property Damage (DCPD) model.
A Look Ahead (Moderate) With stabilizing market conditions, insureds can expect to see positive outcomes, particularly when robust information and engagement in the underwriting process is undertaken.
Q1 Cyber Summary
Overall (Challenging)
The proliferation of ransomware claims, coupled with a general lack of sufficient controls, has led to a significant shift in underwriting attitudes, a reduction of capacity, a contraction of appetite and widespread rate increases.
Pricing (>+30%)
Pricing has significantly increased due to increasingly negative loss results, driven primarily by ransomware claims.
Capacity (Constrained) Insurers continued to review their aggregate exposure through a global lens. In addition to judiciously deploying their capacity on specific risks, some insurers reduced their capacity on a per-insured basis.
Underwriting (Rigorous) Loss prevention has come under close scrutiny and risk controls have been underwritten with great rigor.
Limits (Decreased) Insurers generally decreased their limits, offering fewer $10M and $25M layers to control their aggregate exposure to a global event. Maximum limits were established based on overall revenue size of the insured.
Deductibles (Increased) Deductible increases were common and often based upon the insured’s investment in mitigating and managing their Cyber exposure.
Coverages (More Restrictive) Coverages tied to significant claims activity (ransomware) and geopolitical uncertainties remained under significant pressure.
A Look Ahead (Challenging) Current market conditions will continue until insurers have vetted their portfolios for poor risks, and implemented adjustments to rate, coverage, capacity, etc.
Q1 Property Summary
Overall (Moderate)
Market conditions improved in Q1. Insurers sought out business, however they continued to be somewhat conservative in their underwriting and their deployment of capital. Inflationary pressures on values took center stage and, while more moderate, rate increases continued for the majority of insureds.
Pricing (+1-10%)
Due to profitability improvements insurers have become more flexible and growth focused. Price increases continued in Q1; however, dependent on risk class and loss experience, competition served to temper the extent of increase.
Capacity (Ample) Outside of challenged segments, capacity was not generally an issue in this space; however, insurers monitored their aggregation to earthquake exposure in the Pacific Northwest, which in some cases, restricted capital deployment. Access to international and reinsurance capacity continued to serve an important purpose and pricing and terms were closely monitored to ensure favorable outcomes on behalf of insureds.
Underwriting (Prudent) Underwriting authority continued to be monitored by home office, creating delays in providing terms and conditions. As a result, it has become increasingly important to start the renewal process early and provide robust and detailed underwriting information such as protection and security details and valuation substantiation. There was greater flexibility on manuscript wordings, indicating insurers’ willingness to collaborate to deliver positive outcomes for insureds.
Limits (Increased) Many insurers which reduced capacity over the last few years demonstrated in Q1 a willingness to review and provide additional limits strategically within the tower for well performing risks within their growth appetite. This was on a case-by-case basis; it was not a wholesale change for most insurers. Supply chain concerns continued, and inflationary factors were applied to business interruption values, building equipment and stock on most risks, resulting in increased overall limits required.
Deductibles (Flat) Some risks experienced increases across their program, or on specific perils (e.g., Windstorm, Water Damage) while most experienced stable conditions following the adjustments made during 2020 and 2021.
Coverages (Staple) Following the adjustments that were made across-the-board over the last few cycles, coverages have stabilized, with changes made only on a case-by-case basis. Coverage extensions were not generally available.
A Look Ahead (Moderate) Current market conditions are expected to continue as insurer strategies and growth plans have been established. Modest rate increases are expected to continue, but insurers will take steps to avoid losing profitable risks, especially where long term relationships exist.
Q1 Casualty/Liability Summary
Overall (Moderate)
Rates and capacity have generally stabilized, with the exception of risks in challenging industry classes, or which have significant US exposure or material claims activity. Umbrella and Excess layers have started to experience more competition, while Primary layers have been experiencing a more selective approach from insurers.
Pricing (+1-10%)
As a result of past corrective measures, insurer profitability has improved globally and modest rate increases were the norm in Q1. Underperforming risk types and those with US exposure experienced higher rate increases. Primary layers also experienced pricing increases but, rather than insurer-driven rate increases, this was driven by an increase in exposures as economic activity increases.
Capacity (Ample) Capacity has stabilized and improved in certain segments as insurers which have previously adjusted their appetite focused in Q1 on targeted growth and deployed capacity accordingly, especially on Excess layers.
Underwriting (Prudent) Insurers continued to require detailed underwriting information, allowing insurers to be agile in addressing any adverse underwriting results/trends.
Limits (Flat) Expiring limits were achieved in most cases.
Deductibles (Flat) Insurers have taken past corrective measures to improve performance and as a result, most risks renewed with expiring deductible levels. Some risks continuing to experience claims frequency despite past deductible increases experienced further deductible adjustments.
Coverages (Stable) Coverages continued to be refined to drive greater contract certainty. COVID, Cyber, Wildfire (Fire Fighting Expense) and Sudden & Accidental Pollution Liability were key discussion topics as insurers sought to reduce their exposure in these areas.
A Look Ahead (Moderate) Measures taken by insurers in 2020 and 2021 have yielded more stable market conditions as, in general, underwriting concerns have now been addressed. Capacity is expected to remain stable and rate will likely decelerate for risks experiencing exposure growth. Additional capacity in Excess layers will allow for more competition within towers.
Q1 Directors and Officers Summary
Overall (Moderate)
The D&O market began transitioning as capacity expanded in Canada. Although insurers continued to remediate their portfolios, they looked to transition away from their restrictive underwriting approaches and focus on cautious profitable growth, offering ventilated capacity outside of the high-risk segments.
Pricing (+1-10%)
Modest pricing increases were common in Q1; however, flat – or even slight decreases – were achieved on some best-in-class risks.
Capacity (Abundant) Capacity has been readily available for risks in most industries; however, it remained very challenged for risks in poor performing industries.
Underwriting (Flexible) Underwriting discipline continued; however, signs of flexibility emerged.
Limits (Flat) Flat limits were achieved in most cases.
Deductibles (Flat) Following adjustments that were made in 2020 and 2021, deductibles stabilized.
Coverages (Stable) Coverages were generally stable; however, exclusions related to sanctions, cyber and coverage territory were proposed.
A Look Ahead (Moderate) Insurers are closely monitoring the geopolitical instability, new variants of COVID, and stock market performance and are prepared to adjust their positions in accordance with any risk-impacting change.
Q1 Trade Credit Summary
Overall (Moderate)
Market conditions continued to improve and have nearly returned to pre-COVID levels, as some sectors experienced recent record growth, while a few remained challenged. Competition strengthened as new insurers entered this space and existing insurers sought to grow and retain market share.
Pricing (+1-10%)
Rate trends varied widely depending on industry sector. Some well performing risks and industries experienced modest rate decreases while challenged risks and industries generally experienced more material increases.
Capacity (Ample) As the economy has strengthened, capacity has expanded, especially for in-appetite industries.
Underwriting (Flexible) Underwriting has become more flexible as the economy has strengthened and as insurers have become more retention and growth focused.
Limits (Increased) Limits increased as businesses continued to return to pre-COVID financial positions.
Deductibles (Flat) Expiring deductibles were achieved in most cases, although some poor-performing risks and industries experienced increases.
Coverages (Broader) Coverages broadened to meet increased demand and sales growth.
A Look Ahead (Moderate) Current market conditions are expected to continue, although insurers are carefully watching for any potential impacts from the geopolitical events in Eastern Europe such as interest rate and inflation increases and distressed supply chains, and will likely modify strategies in response.
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