Covid-19 fuels increasing commercial insurance costs

Industry

The Covid-19 pandemic and resulting economic slowdown has adversely affected insurers globally and is contributing to commercial insurance pricing increases and reduced capacity across many lines of business.
This is affecting the insurance markets across the Middle East and North Africa (MENA) — at a time when companies are focused on reducing costs — according to the ‘MENA Insurance Market Update’ released on Wednesday by Marsh, the world’s leading insurance broker and risk advisor.
The MENA region — which comprises Oman, the United Arab Emirates, Saudi Arabia, Bahrain, Egypt and Qatar — has experienced rising commercial insurance rates over the last 12 months, including in the construction, cyber, trade credit, professional liability, and energy and power lines of business.
According to Marsh’s report, these increases are largely a consequence of the transitioning global insurance market and Covid-related claims.
Findings of the report include:
– Directors and officers (D&O) liability insurance rates continued to increase considerably across the region (and globally), with insurers particularly concerned about Covid-19’s impact on liquidity risk and future insolvencies.
– Property rates across the MENA region are rising, especially for organisations with poor loss experiences, high asset values, or high-risk exposures. This is due to (re) insurers imposing more restrictions on the risks they are willing to accept, reduced capacity, the resetting of underwriting requirements, and greater application of internationally accepted standards.
– Cyber insurance rates continued to rise, due to an increase in frequency and severity of global ransomware claims.
– While the pandemic has increased demand for medical coverage, rates remain competitive.
– Motor insurance rates in Oman, Saudi Arabia and UAE decreased due to a rise in competition among insurers.
Globally, commercial insurance prices increased 18 per cent in the first quarter of 2021.
The quarter is the first to show a moderation in the average rate of increase since the index reported the first rise in global pricing since Q4 2017. It follows year-on-year average increases of 22 per cent in the fourth quarter and 20 per cent in the third quarter of 2020.
Christos Adamantiadis, CEO, Marsh Middle East and Africa, said: “While there are signs that global insurance pricing increases moderated in the first quarter, we expect insurance markets across the MENA region to continue to be challenging throughout the remainder of 2021.
“Therefore, it is vital that clients approach the risks they face and how they manage them with renewed vigor, as they reassess their business priorities, start to recover from Covid-19 pandemic, and shift their focus towards growth.”

 

Source: Civil Aviation Authority – Qatar