Insurance Market Outlook 2022

Insurance Market Outlook 2022

The Canadian property & casualty (P&C) insurance market remains in what is termed a ‘hard market’ environment, challenging for us and clients alike. In fact, in over 30 years in the business, I’ve have never seen a market cycle like it.
Rate momentum in many sectors seems to be stabilizing, some capacity re-entering the market, and the insurance companies finally appear to be coming to grips with their own risk appetites and aversions.

We saw tremendous rate pressure through 2020 and 2021. With increased claims costs, ‘extreme’ weather events water damage in general has caused prolonged and significant pressure in most types of insurance. Early on in 2022 we’ve seen some slowing trends of that upward rate pressure in many sectors of insurance – certainly not any reductions at this point – but the increases are not nearly as punitive.
Directors & Officers (D&O) and Cyber Liability are two lines of insurance that remain in a very hard position rate increase wise.

For D&O, insures are still very much concerned that this line of insurance will be hit hard by claims in the wake of the pandemic. I’m not entirely sure that we see it that way, especially in Canada, but D&O is certainly impacted by global happenings and there are plenty of class action lawsuits in their early days and reportedly more on the horizon.

On the Cyber coverage side of things, insures have been hit hard and often with claims in the past 12-18 months especially. Ransomware claims, coupled with a general lack of sufficient cyber security controls, has led to rapid hardening in the cyber insurance market, with widespread rate increases, a reduction of capacity, and major shifts in underwriting and risk appetite.

Capacity is still an issue as insures remain careful what policies they write, but nowhere near as dire as 2020-21, while self-insured retentions and deductibles continue to increase. We think that the amount of consolidation of insurers has contributed to this as well.
Large commercial risks, construction, transportation and umbrella/excess liability still face the ‘hard insurance’ environment in this regard.

There is a bit of a ‘wild card’ or unknown out there and that the trend of reduced auto and business claims during COVID related shutdowns, which are starting to reverse. If that pushes claim payouts and losses in general back to pre-pandemic levels, then there will be a negative impact on the industry – one that could jeopardize some of the ‘good’ news above.
Our principal focus remains to advise our clients on the best road forward in regard to their insurance programme.

Questions? Touch base with one of our advisors or simply email us.

Thank you for your confidence in our office; it is not something we take lightly. We know you have a choice of where to secure insurance.

John Hubbard - President


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