Corporate Insurance Trends: What Is Expected in 2022

Published on March 04, 2022
Corporate Insurance Trends: What Is Expected in 2022

Corporate Insurance Trends: What Is Expected in 2022

The following trends and predictions have been extracted from various rating agencies, insurers, reinsurers and insurance brokers comments on what you can expect in 2022 for your corporate insurance programs.

A Demanding Year

According to Swiss Re Institute’s latest sigma study, there will be a rise in insurance demand that could break premium records in 2022.

This expected rapid growth reflects rising risk awareness in the wake of the pandemic and continued strong rate hardening in insurance commercial lines.

The insurer estimates that global non-life premiums will grew by 3.3% in 2021 and expected to grow by 3.7% in 2022 and 3.3% in 2023.

“Market conditions suggest that positive pricing momentum will continue across all lines and regions. Inflation-driven higher claims development in all lines of business, continued social inflation and persistently low interest rates will be the main factors for market hardening,” said Jerome Haegeli, Swiss Re group chief economist.

The outlook for the insurance industry is also boosted “by a strong cyclical recovery from the COVID-19 shock, but economic growth is expected to slow in the next two years due to an unfolding energy price crisis, prolonged supply-side issues, and inflation risks,” said the study.

Steady and Stable

Property and Liability insurers will enjoy steady underwriting profits and earnings in the face of headwinds, according to Fitch Ratings. The headwinds include higher inflation and a likely reduction in contributions from investment gains. These analysts predict a 97 combined ratio. However, if higher inflation persists, profitability and reserve strength would be expected to weaken in longer-tail segments. Catastrophe risk exposures will add volatility as well. Fitch expects 2022 to be the fifth successive year of price rises, although growth will be slower than in 2021. Analysts also believe that the risk of rising inflation will remain manageable for the industry in 2022.

AM Best has revised its 2022 commercial lines market segment outlook to stable from negative for key segments, despite some near-term challenges including inflation, an uneven economic recovery and continued pressure on jury awards and settlement costs. The stable outlook reflects AM Best’s expectation that “on balance the segment will remain profitable, its risk-adjusted capital position will remain sound, and the segment will be resilient in the face of these near- and longer-term challenges.” AM Best analysts cite the relatively modest negative impact of the COVID-19 pandemic, continued strong pricing momentum and favourable rulings to date on many business interruption coverage disputes. AM Best has revised its market segment outlooks to stable for commercial property and financial lines. The outlooks for commercial motor, general liability, medical professional liability, and professional liability are negative.

Cyber Rates and Wariness

Increasing payouts and shrinking profits has led to insurers reducing the cyber cover they will provide at the same time that demand for coverage is soaring. Insurers have been able to charge higher rates to cover their cyber costs, but they still remain wary.

Fitch Ratings notes that the cyber insurance market saw sizable rate increases and tighter terms and conditions in 2021, as some larger writers of cyber insurance reported deteriorating loss experience. Favourable pricing momentum is expected to continue in 2022, according to a survey by The Council of Insurance Agents and Brokers that indicated rising cyber renewal premium rates over the last 18 months, including a 25% increase in the second quarter of 2021. However, continued unfavorable claims experience points to higher cyber loss ratios in 2021. Earned premium growth from recent pricing actions should help stabilize results for 2022.

S&P Global believes that the pandemic caused economic and insured losses from cyber attacks to skyrocket, which has heightened awareness of the risk and increased demand for cyber re/insurance. “The trend toward digitalisation will inevitably lead to a higher likelihood of cyber incidents. Prices in the cyber re/insurance market could therefore rise sharply over 2022-2023, even doubling in some cases,” said S&P Global

Anticipated / Expected Percentage Increases

Property / Business Interruption:
Non-Challenged Occupancies – +2% to +10%
Challenged Occupancies – +15% Plus

General Liability – +5% to +12.5% Plus
Umbrella Liability (High Hazard) – +10% to +30% Plus
Umbrella Liability (Low / Medium Hazard) – Below + 20%
Cyber Liability – +50% to +150% Plus
Directors & Officers – (Public Company) – Flat to +25%
Directors & Officers – (Private & Not for Profit) – +5% to +40%

General Liability – +5% to + 15%
Umbrella Liability – +15% to +25%
Project Specific Builders Risk – +5% to +15%
Professional Indemnity – +5% to +10% Plus
Healthcare Professional Indemnity:
Primary Layer – +5% to +25%
Excess Layer – +15%
Hospital – +5% to +25%
Allied Health – +5% to + 15%
Physicians – +5% to +15%

Marine Hull & Liability:
Hull & Machinery (Good loss record) – +10% to +15%
Hull & Machinery (Poor loss record) – +20% Plus
P&I – +12.5% Depending on individual club performance
Marine Liability – +15% Plus

Blog Submission: Peter Sellwood

Procurement Australia InsureRight – Insurance & Risk Management

Source: Insurance News

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