Although commercial insurers generally reported healthy combined conditions as well as increases in net income premiums in 2021, commercial insurance markets face continued challenges with inflation, labor shortages and supply chain constraints.
Those challenges continue to drive up replacement and repair costs, lengthen the time needed for recovery and contribute to an intense focus on valuations, according to a report Tuesday from broker Lockton Cos. LLC.
In the first six months of the year, a group of insurers reported sharply rising net premiums and total expense ratios, mainly below 100%.
Hurricane Ian changed all that. “The non-life insurance market was previously on a path towards stabilisation, but Ian represented a major event for both insurers and reinsurers,”; Lockton said.
The 2022 Atlantic hurricane season was the third costliest season on record, according to Munich Re, with $65 billion in insured losses and $110 billion in total losses, according to initial estimates.
Catastrophe losses for accumulated property and auto losses are affecting the insurance industry, contributing to an insurance loss of $24.3 billion for the property/casualty industry in the first nine months of 2022, according to AM Best & Co. Insurers with the largest exposure to personal lines and property saw the most significant impacts.
Questions remain about how this late event and changed calculation will affect how reinsurance and insurance capacity will be used in 2023, and on what terms.
While conditions across many broad lines, including directors’ and officers’ liability, cyber and umbrella/excess liability, are better and more competitive than they have been in recent years, real estate markets may be slowing for overall negotiations.
Workers compensation also remains favorable for buyers and countercyclical for the broader market, Lockton said.