SINGAPORE – Media OutReach – 3 March 2021 – Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, has released its Q4 2020 Global Market Insights Report, which indicates increased insurance pricing across most business lines globally. In Singapore, the reopening of businesses and optimism over the vaccination programme has boosted investor confidence and an economic rebound is expected in 2021. Besides pricing increases, the Singapore insurance market is moderately challenged when compared to the global market.
Aon’s report finds that more than capital and capacity, macro factors and events such as supply chain vulnerability, lower investment yields, ongoing economic uncertainty, social inflation and weather volatility will drive risk complexity in 2021.
Brent Clawson, Chief Broking Officer, Commercial Risk Solutions, Asia, Aon, said, “The impact of claims related to COVID-19 for businesses and insurers has not yet been fully seen. The fluid situation of business interruption driven by regulations, litigation and the macro-economic environment will continue to bring complexities to the fore in 2021. COVID-19 has also resulted in claims activity in other lines of coverage, with numbers and costs likely to increase.”
In Asia, pricing has seen an overall increase. However, the extent of increase varies by several factors such as business line, sector, geography, renewal vs. new business and whether the insurer is local.
Singapore trends:
As the COVID-19 situation evolves, a tight market is likely to continue, at least through the first half of 2021.
Market dynamics of key products in Singapore:
The Ministry of Manpower (MoM) has mandated a minimum level of the required information, which has resulted in more accurate insurer ratings and premium changes for many insureds. Some Employer’s Liability insurers are scaling back coverage related to Contingent Liability, especially for contractors and subcontractors. As insurers seek more clarity following recent changes to WICA, renewal terms have changed in ways that have not been experienced in previous updates to the Act.
Insurers are reacting to recent losses and uncertainty by focusing their appetite and withdrawing capacity. In some cases, new terms and conditions are being required to renew coverage. With the centralisation of the underwriting function and an increased focus on profitability, insurers are no longer looking at risk through the same local lens.
Insureds are also more mindful of pricing given the current economy. Many insureds, especially those whose budgets are not aligned with current market conditions, are exploring alternatives and trade-offs (e.g., increasing deductibles) to offset proposed premium increases.
Cynthia Beveridge, President, Aon Broking, Commercial Risk Solutions, Aon, said: “There is general optimism that the rollout of the COVID-19 vaccine will have a positive economic impact. Along with the introduction of additional capacity into the market, this may result in an easing in the second half of 2021 of some of the challenges experienced in the risk and insurance environment during 2020. That said, risk complexity will continue to be impacted by supply chain vulnerability, a virtual workforce, ongoing economic uncertainty, social inflation and weather volatility. We expect heightened underwriter scrutiny on supply chain transparency and resilience, COVID-19 and communicable disease safety measures and cyber threat resilience. Pricing and coverage terms will continue to address these concerns.”
Notes to Editors
Learn more about how organisations are navigating new forms of volatility, one of their four core priorities as they have shifted in response to the COVID-19 pandemic, in Helping Organizations Chart a Course to The New Better.
Aon plc (NYSE: AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.
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