Insurance premiums rising for Singapore businesses

Higher cost: High-rise buildings dot the Singapore skyline. The impact of claims related to Covid-19 for businesses and insurers has not yet been fully seen, but pricing is increasing all the same. ─ AFP

SINGAPORE: Insurance pricing is increasing across most lines of business in Singapore as the industry reacts to recent losses and uncertainty over the coronavirus pandemic, according to a report by Aon.

Insurers are also trying to limit potential losses by reducing or sometimes withdrawing their capacity to write new policies or renew them, said Aon, a global provider of risk, retirement and health solutions.

In some cases, new terms and conditions are being required to renew coverage, it said.

Businesses, in turn, have become more mindful of the pricing given the current economy and many insured, especially those whose budgets are not aligned with current market conditions, are exploring alternatives and trade-offs – such as increasing deductibles – to offset proposed premium increases, Aon said.

Brent Clawson, its chief broking officer for commercial risk solutions, Asia, 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, ” he noted.

Across Asia, 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, the report said.

However, going forward the roll-out of vaccines may ease concerns across the industry and encourage insurers to boost capacity.

“There is general optimism that the roll-out 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, ” said Cynthia Beveridge, president of Aon Broking and commercial risk solutions.

Still, Aon expects 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, ” Beveridge said.

In Singapore, the impact of pandemic varies across business lines, Aon said. Property insurers here are imposing communicable disease exclusions, withdrawing contingent business interruption coverage and imposing cyber exclusions on property damage and business interruption, the report said.

Deductibles are increasing, particularly for business interruption for Singapore risk locations, it added. Property insurers continue to reduce capacity as they focus on diversification of risk, and a further reduction in capacity is expected as reinsurance rates continue to increase, Aon noted. ─ The Straits Times/ANN

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