Continued price increases expected in 2021: Aon
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Insurance pricing is up across most lines and classes globally and the upward pricing trend will continue well into 2021, Aon PLC said in a report Thursday.
COVID-19 and the economic downturn have heightened underwriting scrutiny and risk aversion from insurers, Aon said in the report.
In North America, increased frequency of high severity claims from mass tort litigation, a severe storm season and the pandemic are putting strain on pricing, limits, deductibles, coverage terms and claims performance, Aon said.
However, the momentum in pricing is expected to temper in the second half of 2021 after prices hit the high-water mark previously reached in 2003, the report said.
Some $20 billion of capital entered the market globally between March and December 2020, Aon said in the report.
Pricing will remain challenged, though there is general optimism that the rollout of the COVID-19 vaccine and the introduction of additional capacity in the market may result in “an easing in the second half of 2021,” Cynthia Beveridge, president of Aon Broking, said in a statement accompanying the report.
Coverage clarifications will continue, especially for communicable disease and cyber, the report said.
Risk complexity will continue to be impacted by supply chain vulnerability, a virtual workforce, ongoing economic uncertainty, social inflation and weather volatility, Aon said.
Alternative risk retention and financing strategies are becoming more prevalent in this environment, the report said.
“When renewing cover, we are advising our clients to explore alternatives such as captives,” Hugo Wegbrans, global chief broker officer, commercial risk solutions for Aon, said in the statement.
More insurance and risk management news on the coronavirus crisis here.
