5 key trends in the Canadian P&C market, according to Aon

P&C insurers are actively managing how they deploy their global capacity for cyber insurance, and the underwriting process for that sector continues to gain rigor, said Aon’s quarterly global markets insights report.

Although the frequency of cyber claims remained relatively constant, complex losses continued to develop, Aon notes. That’s meant waiting periods for coverages related to business interruption have increased. Insurers have also scrutinized coverage offered for critical infrastructure, systemic, correlated events and restricted coverage on either a generalized or event-specific basis.

“The Canadian insurance market will continue to improve slowly except for cyber, catastrophe-exposed risk and loss-driven accounts, which will remain challenging,” said Russell Quilley, Aon’s chief broking officer for Canada.

Conditions in the property market improved during 2022 Q1, and, while insurers sought out business, they also continued to be somewhat conservative in their underwriting and deployment of capital.

“Poor loss performance stemming from myriad factors including an increased frequency of catastrophic weather events, the impact of supply chain disruptions on the cost of construction materials, labor shortages in the construction and transportation sectors, and high inflation continued to challenge the market,” the report said.

Inflation and supply chain disruptions also led to continued increases in loss costs for automobile insurers. “Innovations and new technologies continued to modify risk profiles, as well as underwriting and pricing approaches,” the report said. “While the environment was competitive, modest rate pressure continued.”

Canada’s directors and officers’ insurance market began transitioning as capacity expanded. While insurers were still aligning their portfolios, they aimed to ease off restrictive underwriting approaches and focus on cautious, profitable growth, Aon said.

Likewise, rates and capacity have generally stabilized for casualty and liability, “except for risks in challenging industry classes, or which have significant U.S. exposure or material claims activity,” said Aon. It added umbrella and excess layers have seen more competition, while insurers are approaching primary layers more selectively.

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