Philippine insurers 'firm' despite shrinking capacity: report

Pricing has risen across several segments.

The Philippine insurance market remains firm with increasing renewal rates due to insurers’ restrictions on coverage terms and conditions, according to an Aon report.

Capacity remains generally sufficient but is shrinking, especially for risks which require reinsurance support, as COVID-19-related underwriting proves to be rigorous. Cyber attacks and phishing activities have increased significantly, and many insureds who previously considered cyber coverage a "nice-to-have option" are now exploring it, the report said.

Challenging market conditions are being seen across the spectrum of casualty business. Pricing levels are being recalibrated in response to rising loss costs and poor performing books, leading to higher rates. Coverages are tightening, especially related to cyber and COVID-19, which are being broadly excluded. Local insurers will maintain fluid underwriting positions as treaty renewals begin in Q2 2021.

For the construction segment, insurers have become very particular about the details of projects and require submission of extensive technical specifications for their analysis and review. New treaty guidelines have led to tighter coverage terms and conditions. Pricing has increased, driven partially by the anticipated increase in treaty costs, Aon added.

Pricing continues to surge upwards for the financial lines business even as coverage terms contract. Whilst capacity is currently sufficient, it is expected to tighten locally as insurers complete their 2021 treaty renewals which will likely have a knock-on impact on insurer appetite, pricing, and coverage wordings.

Property pricing has also increased whilst coverage terms have tightened, with insurers moving away from accepting insurance programmes with certain non-damage business interruption coverage provisions. Several insurers have adopted the Lloyd’s Market Association's wordings on communicable diseases whilst others have drafted their own set of wordings based on their respective treaty reinsurance leads, the report said.