The insurance industry, like other business sectors, is impacted by the Covid pandemic, climate change, cyber security and a host of other shockwaves.

Data analytics and actuarial consulting firm Taylor Fry has examined the ramifications of the current social and economic environment on the insurance industry.

Its consultants have prepared a comprehensive report, Radar 2021, and JMD Ross has selected a few key insights to share with you.

For the Commercial Motor class, FY21 was profitable for insurers, which benefitted from increased demand for online shopping and home delivery, accelerated by restrictions. Covid-19 restrictions reduced the number of cars on the road, driving down claim frequency and reducing loss ratios. However, Taylor Fry expects vehicle repair and replacement cost pressures to continue. “The increased use of technology in vehicles and production shortages are impacting on the cost of repairs and wait times for customers,” the report said.

Similarly, in the Domestic Motor portfolio, lockdowns led to fewer cars on the road, reducing claim frequency. That changed as life initially returned to some level of normality, but the Delta strain means claims will again decrease. Some insurers are offering discounts for people who use their vehicles less. Taylor Fry predicts competition will likely intensify as new entrants offer data-driven, usage-based insurance.

For Commercial Property, Taylor Fry found average premium rates flattened over FY21 after four years of consistent increases. But catastrophic event claims and Covid-19 related business interruption claim provisions affected the sector. Following the bushfire royal commission report, industry and government are implementing its recommendations to help ease claims pressures and improve outcomes for insurers and their customers. This includes the launch of the National Recovery and Resilience Agency in May 2021 to strengthen communities against natural disaster events amid ongoing climate change challenges.

In Public and Product Liability, Covid-19’s impacts were mixed. Public liability risks were affected by lockdowns and changes in consumer behaviour. Increased foot traffic resulted in higher risk exposure for some sectors (eg, supermarkets), while lower sales and temporary store closures resulted in decreased risk exposure for other sectors (eg, restaurants, cafes and department stores).

Professional Indemnity has continued to be a difficult class, with premium increases across the board but particularly for financial services, building professionals and medical malpractice. Directors & officers’ liability has been subjected to increases as claim numbers intensify. Some insurers have responded by offering less attractive terms (increased premiums and excesses, reduced coverage and further exclusions). Taylor Fry expects D&O claims to increase as cybersecurity, the pandemic and climate change continue to test directors and officers.

You can download the full Taylor Fry report here.

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