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Sectors including aviation, hospitality, executive risks and property insurance are facing higher rates because of the pandemic, but others, including cyber, have been less significantly impacted, says a report issued by EPIC Insurance Brokers & Consultants on Wednesday.
“Nearly all markets have moved toward higher rates, decreased capacity and more conservative risk selection,” says the report.
The renewal process is taking longer than normal, “with underwriters both working remotely and being inundated with submissions. Overall, submission clarity and quality will be increasingly critical going forward,” it says.
Among the individual markets discussed, the report says because losses tend to be catastrophic, aviation underwriters “have not been willing to offer meaningful premium relief, even for six-or-seven figure deductibles. Pricing is therefore expected to escalate throughout 2020 and beyond across all lines” of aviation insurance.
The pandemic and shelter-in-place orders accelerated the market hardening for directors and officers, employment practices liability and fiduciary crime products, said the report “and it now braced for unprecedented risk, economic uncertainty, social change and corporate transformation.”
In the hospitality sector, “insurers remain fearful of Business Interruption claims, empty restaurants and hotels, and that the return of guests could spark a new wave of claims,” the report says. “With Workers’ Compensation rates hardening, the months ahead could be difficult for the Hospitality sector,” the report says.
In property, things have changed “unlike any time in the past. COVID-19 has brought into question how Property policies should respond to ‘black swan’ events and impacted how underwriters approach renewals and new business. An increasingly difficult market has quickly accelerated from a firming market to a hard market.”
Cyber insurance, however, “remains strong, with ample capacity and active competition, although some markets are applying small premium increases,” the report says.
Corneille Karekezi, chief executive of Nigeria-based African Reinsurance Corp., expects the COVID-19 pandemic to negatively affect the reinsurer's business until next year, Middle East Insurance Review reported. Insurers in more mature African markets may face greater problems as event cancellation and business interruption covers are not commonly sold there, Mr. Karekezi said.