Whilst the commercial insurance market has remained relatively static for the last number of years, the same cannot be said of the corporate insurance market which is entering its fourth year of a “hard market” cycle.

The hard market was initially driven by the losses in this sector of the market coupled with an upward correction of premium rates and deductibles to align with international rating levels. As South Africa has historically enjoyed premium ratings well below the global insurance market, this correction has been quite dramatic in some instances. Most notably, increases in Directors & Officers Liability, Cyber Risks and Assets All Risks policies have been experienced.

A reduction in market capacity and a loss of appetite by insurers for these classes of risk has been a further factor influencing the upward trend in premiums.

Although the contagious and infectious disease cover has been withdrawn from all policies following the outbreak of Covid, the impact of claims paid by insurers will be clawed back through general rating increases.

The outlook may appear bleak for the corporate insurance buyer, however, we are of the view that the market is nearing the end of rate hikes, and rating levels should begin to stabilise in the absence of major losses to these markets.