Q4 Automobile Summary
Overall (Moderate)
Favorable market conditions that had been driven largely by the pandemic have given way to a more moderate environment, with the exception of poor performing and/or difficult risk types, which are experiencing challenging conditions.
Pricing (Flat)
Pricing is moderate as the full impact of the increase in exposures and losses from pandemic levels has not been absorbed by the market.
Capacity (Ample) Capacity is sufficient for most risks; however, heavy risks such as CEP vehicles and car rentals are experiencing limited appetite and capacity.
Underwriting (Prudent) Underwriting is highly dependent on risk performance, with well-performing risks experiencing favorable underwriter attitudes and approaches.
Limits (Flat) Expiring limits can be achieved in most cases.
Deductibles (Increasing) The 19% insurance premium tax continues to serve as an incentive to increase deductibles (which in turn decreases premium and creates tax savings).
Coverages (Stable) As auto risk becomes more technology-driven and complex, insureds are increasingly seeking more flexible and innovative coverages. Insurer product offerings have not kept pace with advances in the auto industry, leaving some risks in challenging coverage positions.
A Look Ahead (Moderate) As the industry continues to innovate and rapidly evolve, the pace of insurer innovation will accelerate. New products and solutions are expected to enter the market.
Q4 Cyber Summary
Overall (Challenging)
Market conditions remain challenging. Pricing continues to escalate and underwriting requirements have become onerous for insureds.
Pricing (>+30%)
Severe rate increases continue in the face on ongoing risk escalation and increasing claims frequency and severity.
Capacity (Constrained) Capacity continues to tighten, with insurers reducing capacity on an individual risk basis.
Underwriting (Rigorous) As risk continues to become more complex, underwriting has shifted to become more centralized. Centralized underwriting is less flexible and more time-consuming.
Limits (Decreasing) Limit decreases are being mandated in response to rising loss costs and underwriter focus on limiting per-risk exposure.
Deductibles (Increasing) Deductible increases are being mandated in response to rising loss costs.
Coverages (Restricting) Most insurers are undertaking ransomware risk evaluations which has led to a contraction of Ransomware coverage. In response, Aon is seeking alternative solutions on behalf of insureds.
A Look Ahead (Challenging) The market is expected to remain challenging, especially for middle market and SME risks.
Q4 Property Summary
Overall (Challenging)
Market conditions are challenging. Appetite has contracted as loss ratios remain high. Significant rate increases are common. Underwriting is stringent and rigorous.
Pricing (+11-30%)
Insurers remain focused on portfolio remediation and continue to impose substantial rate increases, particularly for large natural catastrophe-exposed risks and poor performing risk types.
Capacity (Ample) Capacity is generally sufficient; however, insurers remain highly cautious in where it is deployed.
Underwriting (Rigorous) The underwriting environment is rigorous as insurer governance becomes more restrictive and demanding. Robust, detailed risk quality information is required.
Limits (Flat) Expiring limits can be achieved in most cases.
Deductibles (Increasing) Insurers are requesting deductible increases to avoid smaller and/or frequency-driven claims.
Coverages (Stable) Expiring coverages can be achieved in most cases; however, (silent) cyber terms are being scrutinized.
A Look Ahead (Challenging) Challenging market conditions are expected to continue but will likely ease for most risks, with the key exceptions of distressed risks and critical industries such as food and recycling.
Q4 Casualty/Liability Summary
Overall (Moderate)
While conditions are generally moderate, insurers are reviewing their portfolios and adjusting coverages and pricing where needed, with a particular focus on complex risks.
Pricing (+11-30%)
As appetite contracts – especially for the automotive industry and risks with US exposure – insurers are imposing significant rate increases.
Capacity (Ample) Capacity is stable and generally available for most industries despite some insurers’ de-risking and line re-sizing efforts.
Underwriting (Rigorous) Underwriting is stringent – especially for poor-performing industries. Product Recall and Product Liability are experiencing the most challenging underwriting environment. Insurers are offering coverage for new Liability business only if the risk type aligns with their strategy and appetite. Quality underwriting information is key.
Limits (Flat) Expiring limits can be achieved in most cases..
Deductibles (Increasing) Some industries and coverages have become subject to minimum deductibles and are therefore experiencing mandatory deductible increases to meet insurer requirements. In some cases, insureds are choosing to increase their deductibles as a mechanism for reducing premium increases.
Coverages (Stable) Terms and conditions are generally stable; however, insurers are conducting coverage reviews for complex risks. Cyber exclusions are being introduced by some insurers.
A Look Ahead (Moderate) Current market conditions – including insurer coverage and capacity reviews – are expected to continue.
Q4 Directors and Officers Summary
Overall (Challenging)
Market conditions remain challenging, with significant price increases, rigorous underwriting practices, and continued capacity contraction. COVID-19 impacts continue to ripple across the market, especially for the automotive industry, which faced a production shutdown, delayed parts supply, and employee resource issues. Insurers are operating with heightened scrutiny following the major loss event of a key automotive company. There is significant pressure for the industry to transition to more environmentally friendly processes. Insurer valuation of automotive companies has become increasingly difficult.
Pricing (+11-30%)
Price increases are significant, due largely to ongoing impacts and uncertainty from the pandemic.
Capacity (Ample) While capacity is generally sufficient for most risks, maximum capacities have been markedly reduced.
Underwriting (Prudent) Insurers are rigorously assessing risk and strictly adhering to underwriting standards. The process can be slow so starting early is more important than ever.
Limits (Flat) While existing limits can be achieved in most cases, insurers are very cautious in deploying limit.
Deductibles (Increasing) Deductible increases continue to be imposed for Side B and Side C (where applicable).
Coverages (Restricting) While restrictions continue to be imposed in individual cases – especially related to extended reporting periods, continuity of coverage and insolvency exclusions - widespread restrictions are not being implemented.
A Look Ahead (Challenging) Current market conditions are expected to continue.
Q4 Trade Credit Summary
Overall (Moderate)
Market conditions have moderated as COVID-related insolvencies have not materialized as expected. Insurer appetite is strong, capacity is sufficient, and healthy competition is driving attractive pricing.
Pricing (Down)
Insurer pricing is favorable as insurers are experiencing better-than-expected loss ratios.
Capacity (Ample) While insolvency rates remain low; the financial health of companies in some industries remains under pressure from pandemic-related impacts.
Underwriting (Abundant) Underwriting attitudes are cautious; robust, thorough details – especially related to COVID recovery – are required.
Limits (Flat) Expiring / sufficient limits can be achieved in most cases.
Deductibles (Flat) Expiring deductibles can be achieved in most cases.
Coverages (Broadening) Coverage extensions are again being granted.
A Look Ahead (Moderate) Current market conditions are expected to continue, with more capacity coming into the market, favorable pricing, and broad terms and conditions.
Iberia Market Dynamics
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