Q4 Automobile Summary
Overall (Moderate)
Market conditions are moderate overall as rate increases decelerate for most risks, and in some cases, rate decreases are available. Insurer appetite is growing and the environment is becoming more competitive.
Pricing (+1-10%) Modest rate increases are the norm on well-performing risks with no claims or a low loss ratio.
Capacity (Constrained) While appetite for automobile risks has increased, insurers remain reluctant to write high primary limits, mostly driven by lack of reinsurance capacity.
Underwriting (Prudent) Underwriters continue to be cautious on risks with US exposure and/or that may haul products with an increased pollution exposure.
Limits (Flat) Expiring limits can be achieved on most placements; however, high primary limits are generally available, creating a greater need for excess policies.
Deductibles (Flat) Expiring deductibles can be achieved in most cases.
Coverages (Stable) Expiring coverages can be achieved in most cases.
A Look Ahead (Moderate) Increased competition is expected to create favorable market conditions, especially for well-performing risks.
Q4 Cyber Summary
Overall (Challenging)
Market conditions remain challenging. Controls and loss experience are the primary drivers of pricing and terms.
Pricing (>+30%)
A lack of proper actuarial modelling from the outset of the Cyber marketplace has led to historic under-pricing; as more claims are paid by insurers, better claims data is developed which is leading to more accurate models reflecting higher pricing.
Capacity (Constrained) Due to the global nature of cyber risk, global aggregation of losses is a significant issue for insurers, leading many to limit their capacity deployment.
Underwriting (Rigorous) Underwriting is stringent and robust. Detailed underwriting information on controls, processes and practices is required to achieve the best terms.
Limits (Decreasing) Due to limitations on maximum limits deployed, large towers require more insurers and, in some cases, full expiring limits cannot be achieved.
Deductibles (Increasing) As a way to mitigate capacity restrictions and losses, insurers are looking for insureds to increase their share of the risk as a way to drive better risk control behavior.
Coverages (Restricting) Many insurers are seeking to limit their exposure by reducing coverage.
A Look Ahead (Challenging) Current market conditions are expected to continue well into 2022.
Q4 Property Summary
Overall (Moderate)
Signs of stabilization are emerging; however some rate pressure and capacity issues continue, particularly for complex and / or natural catastrophe-exposed risks.
Pricing (+1-10%)
Well-performing risks are experiencing modest rate increases while other risks are experiencing more significant increases.
Capacity (Ample) Most insurers have addressed their capacity issues while others continue to remediate on a case-by-case basis. Insurers remain cautious in their capacity deployment.
Underwriting (Prudent) There is a growing trend to transition underwriting authority back to the region but with continued oversight from home office leadership related to terms and pricing. Underwriters remain diligent in their collection of information including appraisals, risk control, etc. Referral underwriting, when needed, slows the process.
Limits (Flat) Expiring limits can be achieved in most cases.
Deductibles (Flat) Most deductible mandates have been addressed on prior renewals, though some Water Damage / Named Storm deductible increases continue to be mandated. Large, complex, and/or poor performing risks are experiencing deductible pressure.
Coverages (Staple) Expiring terms and conditions can be achieved in most cases, as mandated adjustments were already made in previous years.
A Look Ahead (Moderate) A further stabilization is expected, with very few issues related to capacity, terms or conditions.
Q4 Trade Credit Summary
Overall (Moderate)
The market is stable. New capacity is entering the market. Modest price increases are the norm.
Pricing (+1-10%)
Pricing is up modestly.
Capacity (Constrained) Capacity remains slightly constrained but economic improvements are creating optimism and new capacity is emerging.
Underwriting (Rigorous) Insurers remain cautious and are carefully reviewing insureds’ financials.
Limits (Increasing) Limits are gradually increasing, however insurers remain cautious in their deployment of capacity.
Deductibles (Increasing) Deductible increases are being mandated for higher risk geographies and industry segments.
Coverages (Broadening) Expiring coverage terms – and in some cases, new coverage extensions – can be achieved.
A Look Ahead (Moderate) As vaccination rates increase and trade levels return to normal, additional capacity is expected to be deployed, potentially driving a more favorable rate environment.
Q4 Casualty/Liability Summary
Overall (Challenging)
The primary market is stable as insurers focus on profitable growth. Well performing, non-US exposed risks are experiencing single digit rate increases. The Excess market, on the other hand, is volatile, driven by adverse loss experience. Umbrella and Excess insurers continue to reduce capacity, withdraw from certain risk classes, and restrict coverage. While US litigation trends and rising loss costs play an important role in pricing, facultative reinsurance rates, capacity and conditions are also important factors.
Pricing (+1-10%)
Primary pricing is stabilizing as underwriting and profitability issues have been addressed in 2019 and 2020. Umbrella and Excess increases have been more volatile and significant as there is more capacity at stake. In cases where there is a severity issue, or a significant US presence, rate increases may be severe as there is growing concern of the potential for full-limits losses in light of ongoing escalation in awards amounts stemming from US social inflation and sympathetic judges. Placements changing insurers may experience the most significant pricing impacts as the benefit of incumbent relationships is no longer at play.
Capacity (Constrained) Primary capacity is stable, and some insurers are even offering additional capacity for well-performing risks. Umbrella and Excess capacities are decreasing for risks with loss frequency or severity, US auto fleets (especially those with heavy vehicles), significant US sales/operations, high-risk products, and/or for poor-performing classes of business. Some Insurers have reviewed their book of business and, where profitability is an issue, are issuing global corporate mandates to restrict capacity.
Underwriting (Prudent) Results are improving; however, given the long-tail nature of liability claims, the full impact of strategy changes will not be realized in the short run. As such, insurers continue to monitor results and tighten internal governance until there is further clarity on any additional remediation efforts that may be needed.
Limits (Flat) Expiring limits can be achieved for most placements; however, where there is significant US exposure, challenging operations or historically under-priced capacity, pricing may be higher to renew the same limits.
Deductibles (Flat) Expiring deductibles can be achieved in most cases as they have already been adjusted at past renewals.
Coverages (Restricting) COVID-related (Transmissible Disease) restrictions have already been applied and the focus has shifted to Cyber and Sudden & Accidental Pollution. Insurers remain focused on tightening their wordings and removing ambiguous language.
A Look Ahead (Challenging) Continued rate increases are expected, with US exposure, class of business and claims performance serving as the main factors impacting the extent of increase. New capacity is expected to flow into the market, which should create a more competitive environment.
Q4 Directors and Officers Summary
Overall (Challenging)
Profitably issues, combined with ongoing concerns related to the impacts of COVID-19 on some sectors, continue to create a challenging market environment. There is a heightened focus on the ability of companies to deliver on their ESG commitments.
Pricing (+11-30%)
While there are pockets of minimal rate increases or as-is renewals, most risks are experiencing more significant price increases. Canadian market trends are lagging behind the US trends, with 2022 expected to be the third year of rate increases in Canada.
Capacity (Constrained) While Canada has experienced some new capacity from the US, Bermuda and London, overall capacity remains constrained following a notable contraction in recent years. The province of Quebec is experiencing capacity constraints due to their Civil Code and issues related to the payment of defense costs in excess of limits.
Underwriting (Rigorous) Underwriting is rigorous for privately held organizations due to incomplete visibility into their financial performance. In addition, underwriting scrutiny is high for US-listed organizations. The underwriting process is extensive, with underwriting questions submitted in advance of discussions with each insured's senior leadership team. COVID-19, Cyber and ESG (including D&I initiatives) are key issues for D&O underwriters as well as any systemic sector-specific issues.
Limits (Flat) Most limit reduction actions have been executed over the past two years. Expiring limits can be achieved in most cases.
Deductibles (Increasing) Deductible increases continue to be leveraged by underwriters to help address profitability concerns, and there is general pressure on deductibles for most risks, unless a significant adjustment was already made.
Coverages (Restricting) Insurers are carefully reviewing coverage and focusing on allocation, Extended Reporting Period (ERP), Derivative Investigation, and Cyber.
A Look Ahead (Challenging) The market is expected to become less volatile and risk-specific. Conditions will vary for private, Canadian exchange listed or dual listed organizations. Certain sectors in Canada, such as mining and oil & gas, will continue to see ESG challenges and constrained capacity. Cannabis and cryptocurrency firms – especially those with US exposure – are expected to continue to experience a challenging marketplace.
United States Market Dynamics
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