Insurance Markets Reports

Markets in Focus

COVID-19 caused a quick shift in the insurance industry in a number of ways. Technology is now more essential than ever in order for companies to run smoothly utilizing a virtual workspace.¹ As a result of the low-interest rates, demand for liquidity and the possibility of unexpected occurrences, organizations are being forced to modify their practices and specialize their insurance programs.¹

Markets in Focus

The fifty most valuable hospitality brands lost almost a third of their value in 2021 due to the ongoing impact of COVID-19, but in 2022 financials are trending back toward their to a pre-pandemic pace.

Markets in Focus

From severe weather events, accidents, staffing shortages and criminal activity, hotels and casinos are facing many challenges in 2022, impacting their risk management strategy decisions as well as pricing on certain lines of coverage.

Markets in Focus

Even though the commercial insurance industry has grown over the past few years and revenues have been increasing, the market slightly slowed down because of the COVID-19 pandemic.¹ This was mainly due to the severe economic downturn, with businesses closing temporarily or permanently.² With businesses ceasing operations, there was a sharp rise in the unemployment rate, creating lower demand for industry services.³ The demand for businesses considered to be essential and the corresponding increased premiums were enough to offset the effects of the pandemic.⁴ As businesses reopen and the economy recovers, industry revenue will continue to rise.⁵ Growing businesses are more likely to expand their operations when profit levels increase, but to expand, they need to purchase more insurance for employees and facilities to continue operating as a legal business entity.⁶ Industry revenue is anticipated to grow at an annualized rate of 4.4% to $240.2 billion in 2022 including a 2.8% rise in 2022 alone.⁷ While pricing is still relatively elevated, capacity remains available within the market for favorable accounts. To reflect this change in the market from the pricing peaks of 2020 and early 2021, we are no longer referring to the general P&C market as a “hard market,” but instead have transitioned into what we are calling a “disciplined market.”

RISK in Focus is an overview to show recent risks in the workplace, on the jobsite and throughout the world.

A comprehensive review of hazards that contribute to the risks are spelled out to help you learn and avoid these hazards for yourself and your company.

 

This edition covers:

+ Maintaining Staffing Levels

+ Cyber Risk

+ Alcohol Liability

+ Slips, Trips + Falls

+ Water Damage, Mold + Related Risks

+ Rising Cost of Insurance for Commercial Vehicles

Markets in Focus

Since few industries were as severely impacted by COVID-19 as the travel and leisure sectors, many industry commentators thought it would take years for hotels and casinos to return to pre-pandemic levels. However, both industries have shown incredible resilience and reached January 2020 levels of occupancy, rates and revenue in July of 2021 (as can be seen in the chart on the next page). Despite the challenges, hotel and casino operators were able to evolve their businesses to safely attract guests and thus improve their economic positions as pent-up leisure travel demand had a positive impact on their bottom line.

Markets in Focus

Through Q3 2021, it appears that the commercial insurance industry generally remains in an elevated pricing environment. Conditions have appeared to soften across many lines of coverage since the peak of the pandemic in 2020, but year over year rate increases remain the norm.

Overall, the trends of social inflation, increased frequency of catastrophic events, and low investment yields driven by historically low interest rates are still issues carriers are having to work through as 2021 ends. However, as the Federal Reserve looks to taper quantitative easing and reduce bond purchases, there will most likely be upward pricing pressure on interest rates, which would be a welcomed change for carriers. Timing on this remains a question mark though as the Fed has stressed flexibility on the timeframe and pace of the tapering and interest rate increases.

Markets in Focus

While many industries faced challenges in 2020, few were impacted by COVID-19 quite like the travel and leisure industry. Per the American Hotel & Lodging Association, the impact of COVID-19 on the travel industry was nine times worse than that of 9/11. In particular, hotels, resorts, and casinos experienced their most devastating year in decades, resulting in historically low occupancy, low revenues, massive job loss, and closures across the country.

These industries were some of the first to be affected by the pandemic after travel was forced to a virtual halt in early 2020, and it appears they will be one of the last to recover, as global air travel is not expected to return to 2019 levels until 2024¹.

Despite this, casinos, resorts, and hotels are doing their best to move forward and create an inviting environment for when travel begins to return in 2021, and patrons become more comfortable as vaccines are more widely distributed. As such, business owners in this space will be keeping a close on their P&L statements as business slowly starts to improve. One key component they will be watching is their risk management and insurance costs, which have become a more significant portion of their budget.

Markets in Focus

As the insurance industry looks to move forward from a tumultuous 2020, many of the market factors that impacted P&C insurer’s financial performance in 2020 continue into 2021, albeit to an anticipated lesser degree.

Overall, the pre-pandemic trends of social inflation, increased frequency of catastrophic events, and low investment yields driven by historically low interest rates are still issues carriers are having to work through in 2021.