Q4 Automobile Summary
Overall (Moderate)
Loss costs are rising – driven by inflation as well as a return to normal driving levels. Insurers have responded by increasing pricing, even for well-performing risks. This has created a moderately challenging market.
Pricing (+1-10%)
In 2020, losses decreased significantly as a result of the COVID-related reduction in driving activity. This led to renewal discounts. As loss ratios have returned to pre-COVID levels, insurers have increased pricing, even for well-performing risks, to improve their portfolio performance.
Capacity (Ample) For well-performing risks, capacity is stable, with many insurers offering robust limits. Poor-performing risks; however, may experience less insurer appetite and some capacity constraints.
Underwriting (Prudent) Underwriting is stable; however, as inflation is around 10%, there is a trend amongst underwriters to be more cautious and conservative on loss-active risks.
Limits (Flat) Expiring limits can be achieved in most cases.
Deductibles (Increasing) Deductibles are increasing as insurers adjust for inflation and, for imported vehicles, account for exchange rate fluctuation.
Coverages (Stable) Expiring coverages can be achieved in most cases. This is an area of development for the market as some insurers explore pay-per-use, intermittent insurance, and other experience-driven coverage and rating options. While these options are currently used primarily in the personal lines space, insurers are considering expanding into the small fleet space in the near term.
A Look Ahead (Moderate) A continued evolution of Auto pricing and coverages is expected as more insurers consider leveraging alternative, experience-driven approaches and models.
Q4 Cyber Summary
Overall (Challenging)
As risk complexity grows and losses escalate, insurance market conditions are challenging, with significant price increases, a rigorous and rigid underwriting process, and constrained capacity.
Pricing (>+30%)
Rates are up materially, driven by increased risk complexity, growing volatility, and escalating losses.
Capacity (Constrained) Capacity is tight, but has stabilized following a notable contraction earlier in the year.
Underwriting (Rigorous) Underwriting is rigorous and rigid with no signs of abating. Automation technology is a topic of concern, especially related to manufacturing risks. Poor cyber hygiene may result in insurers declining to quote.
Limits (Flat) Expiring limits can be achieved in most cases, especially for insureds willing to modify layer structures. In some cases, increases can be achieved. Quota share arrangements have become very difficult to secure.
Deductibles (Increasing) Retentions continue to increase as claims costs rise and to adjust for currency challenges.
Coverages (Restricting) Coverage clarifications and exclusions continue to be applied, particularly with regard to Ransomware and Business Interruption. Some insurers are exploring limiting coverage to liability only.
A Look Ahead (Challenging) As Cyber risks continue to rapidly grow and evolve, insurers are expected to further refine their appetites and coverage terms and conditions.
Q4 Employers Liability/Workers Compensation Summary
Overall (Moderate)
The Brazilian judicial system is, in general, taking tougher stances, including increasing indemnity requirements 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 are proposing to increase 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 remains abundant; however, some insurers are limiting their exposure in poor performing industries.
Underwriting (Prudent) Underwriting is conservative and cautious, with many questions arising throughout the process.
Limits (Flat) Expiring limits can be achieved in most cases; however, some insurers are limiting their exposure in poor performing industries.
Deductibles (Increasing) Deductibles are increasing and there is a trend to apply them on a per victim rather than per event basis. In some cases, insureds are opting for deductible increases to help offset rate increases.
Coverages (Stable) Expiring coverages can be achieved in most cases. There is minimal flexibility or willingness to remove restrictions related to underground or underwater works, aviation (crew), professional, diseases, or construction workers (tunnels and/or dams).
A Look Ahead (Moderate) Current market conditions are expected to continue.
Q4 Trade Credit Summary
Overall (Moderate)
Favorable portfolio performance – especially following the price increases of 2020 – has led to moderate market conditions.
Pricing (Flat)
Pricing increased during the pandemic in anticipation of rising losses; however, losses did not materialize as expected. This led to insurer optimism and flat renewal pricing in Q4.
Capacity (Abundant) Capacity is abundant.
Underwriting (Flexible) Underwriting attitudes and behaviors vary widely based on sector, but generally, underwriters are flexible while somewhat conservative.
Limits (Flat) Expiring limits can be achieved in most cases; however, some insurers have imposed limit reductions for some at-risk sectors. In these cases, additional limits can often be secured from other insurers or the reinsurance market.
Deductibles (Flat) Expiring deductibles can be achieved in most cases.
Coverages (Stable) Expiring coverages can be achieved in most cases.
A Look Ahead (Moderate) Current market conditions are expected to continue.
Q4 Casualty/Liability Summary
Overall (Moderate)
While market conditions are generally stable, poor-performing risks are experiencing underwriting stringency, material price increases, increasing deductibles, and a contraction of coverage terms.
Pricing (+11-30%)
Rate increases are common, the extent of which varies based on industry, loss history and the need for facultative reinsurance. Risks in the warehousing, construction, mining, energy, highway and transportation industries are experiencing the most challenging pricing environment.
Capacity (Abundant) Capacity is abundant; however, some insurers are limiting their exposure in poor performing industries.
Underwriting (Prudent) There is a strong focus on profitability, which is driving underwriting discipline and rigor. Underwriting discussions related to Product Recall and Product Liability can be challenging.
Limits (Flat) Expiring limits can be achieved in most cases.
Deductibles (Increasing) Deductible increases are common, driven primarily by insureds seeing to manage premium costs.
Coverages (Stable) Coverage terms are generally 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.
Q4 Directors and Officers Summary
Overall (Challenging)
Market conditions remain challenging, driven by increasing loss frequency and severity coupled with a transition of local underwriting authority to central teams. Pricing remains a challenge, especially for US listed companies. Deductibles for Side C coverage are under pressure. Capacity has tightened but is generally available and varies based on exposure and tower position, with high excess layer capacity generally more available.
Pricing (+11-30%)
Rate increases are material, but vary widely based on exposure, claims history and adjustments made at past renewals, with US listed companies experiencing the most significant increases.
Capacity (Constrained) Following poor performance in recent years, insurers have become more cautious in their capacity deployment and have reduced their available capacity and/or opted for higher tower positions. The most impacted risks are (i) listed companies with US exposure, (ii) companies that had claims in the last three years, (iii) companies in bankruptcy or a judicial reorganization process, (iv) financial institutions, (v) healthcare companies.
Underwriting (Prudent) Underwriting has become more rigorous and time-consuming as part of the shift from local authority to central authority. Detailed underwriting information is more important than ever as it serves to differentiate risk and enable access to capacity and coverages.
Limits (Decreasing) Insurers have become more conservative in the limits they are willing to offer. In addition, working with their Aon team, many insureds are exploring changes to limits and program structures, the use of reinsurance, and other alternatives to find the most cost-effective approaches.
Deductibles (Flat) While expiring deductibles can be achieved in most cases, for listed companies, especially those with US exposure, deductible increases, driven by class action losses, are being mandated on Side C coverage.
Coverages (Restricting) COVID-19 and Cyber exclusions continue to be imposed.
A Look Ahead (Challenging) Current market conditions are expected to continue.
Q4 Property Summary
Overall (Moderate)
Market behavior varies significantly by client industry, loss history, exposure type, risk management maturity, and level of local underwriting authority. Conditions remain challenging for complex and high-hazard risks such as energy, heavy chemical, pulp/paper, and logistical/warehouse, particularly those requiring high limits, which lack local capacity. On the other hand, less complex risks continue to experience moderate market conditions with favorable underwriting and an abundance of capacity.
Pricing (+1-10%)
Modest rate increases continue for high hazard and/or complex risks, driven by global insurer guidelines and reinsurance pressure.
Capacity (Abundant) Local market capacity is abundant across the country, with the key exception of high-hazard and complex risks, on which local underwriters have limited authority.
Underwriting (Prudent) Underwriters have become more cautious and stringent and are requiring extensive underwriting information and risk management improvements. Recent survey reports for complex and high hazard risks are mandatory.
Limits (Flat) Expiring limits can be achieved in most cases.
Deductibles (Flat) Expiring deductibles can be achieved in most cases; however, poor performing risks are experiencing mandatory increases aimed at limiting insurer exposure. High-hazard and complex risks are also subject to global guidelines, which may require deductible increases. In some cases, insureds are electing to increase their deductibles to help offset price increases.
Coverages (Stable) While coverage is stable overall, negotiations related to Strikes, Riots, & Civil Commotion, Contingent Business Interruption, and Natural Catastrophe coverages have become more challenging.
A Look Ahead (Moderate) Current market conditions are expected to continue. Robust, detailed underwriting information will likely become even more important as a potential differentiator, to help elevate underwriter risk confidence and achieve better placement results. Starting the placement process early is essential as well, particularly in light of changes to insurer underwriting guidelines, which may introduce additional complexities.
Chile Market Dynamics
©2022 Aon plc. All rights reserved | Contact Us | Privacy Policy | Legal