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SINGAPORE –\u00a0Media OutReach<\/a>\u00a0– 3 March 2021\u00a0–\u00a0<\/b>Aon plc<\/a> (NYSE: AON), a leading global professional services
Aon’s report finds that
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Brent Clawson, Chief Broking Officer,
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In Asia, <\/i><\/b>pricing
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Singapore trends:<\/b><\/p>\n
As the COVID-19 situation evolves, a tight market is likely to
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Market dynamics of key products in Singapore:<\/b><\/p>\n
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The Ministry
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Insurers are reacting to recent losses and uncertainty by focusing
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Insureds are also more mindful of pricing given the current
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Cynthia Beveridge, President, Aon
Notes to Editors<\/b>
Learn more about how
\nfirm providing a broad range of risk, retirement and health solutions, has released
\n<\/b>its <\/b>Q4 2020 Global Market
\nInsights Report<\/a>, which indicates
\nincreased insurance pricing across most business lines globally. In Singapore, the reopening of businesses and
\noptimism over the vaccination programme has boosted investor confidence and an
\neconomic rebound is expected in 2021. Besides pricing increases, the Singapore insurance
\nmarket is moderately challenged when compared to the global market. <\/p>\n
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\nmore than capital and capacity, macro factors and events such as supply chain
\nvulnerability, lower investment yields, ongoing economic uncertainty, social
\ninflation and weather volatility will drive risk complexity in 2021. <\/p>\n
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\nCommercial Risk Solutions, Asia, Aon<\/b>, said, “The impact of
\nclaims related to COVID-19 for businesses and insurers has not yet been fully
\nseen. The fluid situation of business interruption driven by regulations,
\nlitigation and the macro-economic environment will continue to bring
\ncomplexities to the fore in 2021. COVID-19 has also resulted in claims activity
\nin other lines of coverage, with numbers and costs likely to increase.” <\/p>\n
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\nhas seen an overall increase. However, the extent of increase varies by several
\nfactors such as business line, sector, geography, renewal vs. new business and whether
\nthe insurer is local. <\/p>\n
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\ncontinue, at least through the first half of 2021.<\/p>\n
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\ncommon.<\/li>\n
\nscrutiny.<\/li>\n
\nthe Singapore market.\u00a0<\/span><\/li>\n<\/ul>\n
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\nduring the Circuit Breaker period in the first half of 2020, businesses are re-opening
\nand ridership of private hire fleets is now slowly increasing. As a result of
\nmany months of reduced ridership and fewer vehicles on the road, insurers
\nexperienced favourable claims performance in 2020. In anticipation of a return
\nto normal traffic patterns once restrictions are lifted, market pricing is seeing
\na modest increase.<\/li>\n
\ndeductibles are increasing in this field. Many insurers are imposing blanket
\nexclusions for communicable disease as well as data risk and cyber threats.
\nReinsurance costs are escalating, which are likely to keep primary rates
\nelevated.<\/span><\/li>\n
\nare increasing, mainly driven by changes in the new Work Injury Compensation
\nAct, 2019 (WICA). In addition to increased benefit levels, insurers now have
\nthe added responsibility of assessing Permanent Incapacities. Some insurers
\nhave appointed third-party providers to make these assessments, thereby
\nincreasing costs for this class of insurance. Insurers are becoming more
\nstringent in their underwriting requirements and approach in an effort to balance
\nunderwriting guidelines with WICA requirements.<\/span><\/li>\n<\/ul>\n
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\nof Manpower (MoM) has mandated a minimum level of the required information,
\nwhich has resulted in more accurate insurer ratings and premium changes for
\nmany insureds. Some Employer’s Liability insurers are scaling back coverage
\nrelated to Contingent Liability, especially for contractors and subcontractors.
\nAs insurers seek more clarity following recent changes to WICA, renewal terms
\nhave changed in ways that have not been experienced in previous updates to the Act.<\/p>\n
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\ntechnical pricing approaches and rationalising capacity at the portfolio level
\nleading to increased premium and decreased capacity. Insurers are being conservative
\nin their scrutiny of insureds’ financial positions, operations (including
\nreturn-to-work policies), controls and governance. Companies that are in
\nindustries severely impacted by COVID-19 and\/or have weak financials will
\nlikely see narrowing coverage with little room for negotiation.<\/li>\n
\nCommunicable Disease Exclusions, withdrawing Contingent Business Interruption
\ncoverage and imposing Cyber exclusions on Property Damage and Business Interruption
\n(PDBI). Deductibles are increasing, particularly for Business Interruption for
\nSingapore risk locations. Insurers continue to reduce capacity as they focus on
\ndiversification of risk, and a further reduction in capacity is expected as
\nreinsurance rates continue to increase.<\/span><\/li>\n<\/ul>\n
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\ntheir appetite and withdrawing capacity. In some cases, new terms and
\nconditions are being required to renew coverage. With the centralisation of the
\nunderwriting function and an increased focus on profitability, insurers are no
\nlonger looking at risk through the same local lens. \u00a0<\/p>\n
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\neconomy. Many insureds, especially those whose budgets are not aligned with
\ncurrent market conditions, are exploring alternatives and trade-offs (e.g., increasing
\ndeductibles) to offset proposed premium increases. <\/p>\n
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\nBroking, Commercial Risk Solutions, Aon<\/b>, said: “There is
\ngeneral optimism that the rollout of the COVID-19 vaccine will have a positive
\neconomic impact. Along with the introduction of additional capacity into the
\nmarket, this may result in an easing in the second half of 2021 of some of the
\nchallenges experienced in the risk and insurance environment during 2020. That
\nsaid, risk complexity will continue to be impacted by supply chain
\nvulnerability, a virtual workforce, ongoing economic uncertainty, social
\ninflation and weather volatility. We expect heightened underwriter scrutiny on
\nsupply chain transparency and resilience, COVID-19 and communicable disease
\nsafety measures and cyber threat resilience. Pricing and coverage terms will
\ncontinue to address these concerns.”<\/p>\n
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\norganisations are navigating new forms of volatility, one of their four core
\npriorities as they have shifted in response to the COVID-19 pandemic, in Helping Organizations
\nChart a Course to The New Better<\/a>.<\/p>\n