Singapore Q3 Market Dynamics
Landscape
After seeing a relatively limited spread of COVID-19 for much of 2020 and 2021, in September 2021 Singapore saw new cases of the virus jump, so that by the beginning of October they reached a seven-day average of over 2,000.
The government reported that around 98% of cases were asymptomatic or mild, with about 82% of the population having received two doses of vaccine. The sharp increase in cases followed the relaxation of restrictions in August, and the government has reimposed limits on gatherings while stressing that in the long term it aims to relax controls and allow the virus to become endemic.
Buoyed by vaccination progress, prior to the outbreak Singapore’s government had raised its GDP growth forecast to between 6% and 7%, despite a quarter-on-quarter contraction of 1.8% in the second quarter. A recovery of consumption saw annual inflation hit 2.5% in July, the highest level in eight years. The Singapore government is seeking to finance major infrastructure projects to stimulate a recovery from the impacts of COVID-19. In September the Central Bank issued its first bonds for this purpose, after an April law authorised the government to raise up to SGD 90 billion through borrowing rather than relying on a budgetary surplus as it has since the 1980s.
Key Indices - Singapore
Market Dynamics
Singapore Featured Products Q3 2021
Q3 Automobile Summary
Overall (Stable) While the favorable results which began in 2020 are continuing, Automobile underwriters remain cautious because, as the economy recovers from the recent round of restrictions and activity increases, accidents are expected to rise and the performance of this class is expected to decrease.
Rates (Flat) Pricing remains stable as the positive impacts of 2020 and 2021 are expected to change when the economy reopens and accidents again increase.
Capacity (Ample) Capacity remains stable.
Underwriting (Prudent) Underwriting is cautious; however, there is some flexibility, especially for well-performing risks.
Limits (Stable) Limits are stable.
Deductibles (Stable) Deductible levels remain minimal relative to each sector.
Coverages (Stable) The three main coverages for automobile insurance - determined by the vehicles' age and financing – remain stable.
A Look Ahead (Stable) As activity continues to increase, underwriting profits are expected to deteriorate. Current underwriting prudency will serve to keep market conditions stable. While some insurers will focus in Q4 on meeting growth budgets, this will not be at the expense of underwriting prudency.
Q3 Casualty/Liability Summary
Overall (Stable) Market conditions are modestly challenging but stabile.
Rates (+1-10%) Insurers are reviewing legacy pricing to ensure adequacy and as a result, modest increases are common, except for poor performing risks or high hazard risk types, which are experiencing more significant increases.
Capacity (Ample) Capacity remains sufficient despite a reduction for some classes of risk and loss-active risks.
Underwriting (Prudent) The underwriting process is rigorous and detailed underwriting information is required. There is an increased willingness amongst underwriters to decline to quote based on insufficient information and/or to avoid broad or multi-year coverage.
Limits (Stable) Expiring limits are available and insurers are, in most cases, willing to increase them if needed due to contractual requirements, significant business expansion, etc.
Deductible (Stable) Insureds are exploring deductible increases but most elect to renew at expiring levels due to proposed premium reductions that are not commensurate with the additional assumed risk.
Coverages (Restricting) The coverage environment is fluid and, in some cases, underwriters have, late in the underwriting process, withdrawn coverage that was made available at the outset of the underwriting process. Common exclusions include Communicable Disease and USA/Canada domiciled Operations. In addition, coverage extensions such as Care, Custody and Control are subject to reduced sub-limits.
A Look Ahead (Stable) With ongoing pricing reviews, market conditions may deteriorate slightly but significant volatility is not expected.
Q3 Property Summary
Overall (Stable) Rate increases are decelerating, and insurers are maintaining – and, in some cases, increasing - capacity for familiar risk types with favourable claims experience.
Rates (+1-10%) Small and Medium Enterprise risks are achieving renewal terms at competitive/flat pricing, while risks requiring international capacity – especially those with natural catastrophe exposures - are experiencing rate increases.
Capacity (Ample) Capacity remains sufficient; however, the cost of international capacity can be high, especially for risks with natural catastrophe exposure.
Underwriting (Prudent) Insurers continue to focus on quality underwriting information, and underwriting is rigorous for risks with natural catastrophe exposure.
Limits (Stable) Limits are stable; however, many insurers are aggregating limits for natural catastrophe exposures.
Deductibles (Stable) Domestic risks – except those impacted by claims frequency - are enjoying low deductibles. There is an increased trend for insureds to explore deductible options in exchange for premium reductions.
Coverages (Stable) Coverages have stabilized following the restrictions for Communicable Diseases, Cyber, and Non-Damage Business Interruption that were introduced in 2020.
A Look Ahead (Stable) A continued focus on natural catastrophe risks is expected, along with an increase in related reinsurance costs. As a result, capacity may further contract and pricing may increase.
Q3 Surety Summary
Overall (Challenging) Numerous bonds have been called, and as a result, the market has shifted. Insurer appetite has narrowed materially.
Rates (+11-30%) Pricing is continuing to increase significantly following poor performance in 2020 and 2021.
Capacity (Constrained) Due to poor performance in this class, insurers have withdrawn capacity. Very limited capacity is now available
Underwriting (Stringent) Insurers have become risk-averse, and very few are supporting Surety on standalone basis. Underwriting is highly selective and rigorous, with extensive information required. Insurers are willing to walk away, even from existing business.
Limits (Stable) Limits are available at requested amounts.
Deductibles (Not Applicable)
Coverages (Stable) Terms and conditions are generally stable
A Look Ahead (Challenging) Challenging conditions are expected to continue, including significant price increases, narrow appetite, and very limited capacity.
Q3 Trade Credit Summary
Overall (Stable) Insurers have gained confidence as COVID-19 related uncertainty subsides. Risks renewing with the incumbent insurer are experiencing a generally stable market, although capacity can be constrained for some large risks. Risks – especially those in high risk sectors – that are moving to a new insurer may find limited appetite and less favorable pricing.
Rates (+1-10%) Pricing has stabilized in 2021, but continues to be elevated – even for well-performing risks - from pre-COVID-19 market conditions.
Capacity (Ample) Capacity is stable, except for sectors that were most impacted by the pandemic.
Underwriting (Prudent) Underwriters are cautious, but flexibility has increased from 2020.
Limits (Stable) Limits are stable, but some well-performing risks may achieve increases.
Deductibles (Stable) Deductibles are generally stable, with the exception of poor-performing risks, where deductible increases are being mandated.
Coverages (Stable) As insurer confidence increases, coverage improvements can be achieved, primarily for well balanced portfolios with a good loss history.
A Look Ahead (Stable) Current conditions are expected to continue for the remainder of 2021.