23 March 2023Analysis

Risk Strategies publishes 2023 market outlook

Risk Strategies has published its 2023 market outlook, which looks at conditions in business insurance, employee benefits and private client services.

The report points out that the market continues to face uncertain economic conditions, with areas of ongoing volatility that include inflation and rising interest rates, leading to uncertainty about future prices, 18 US weather/climate disaster events in 2022 with losses exceeding $1 billion each and ransomware and cyberattacks continuing to grow, with approximately 80% of attacks resulting from human error.

In addition the report said that higher claims costs from escalating verdicts and rapidly evolving environmental, social, and governmental (ESG) conditions are affecting individuals and businesses, employers are spending more on compensation and benefits to counter continued challenges with attracting and retaining talent and war, in addition to being a humanitarian crisis, is affecting supply chains and consumers around the world, as well as adding uncertainty about future policies and regulations.

Looking at insurance conditions, the report said that: “Despite the volatility and uncertainty, we are seeing a 53-year low unemployment rate, inflation is beginning to ease, supply chain issues are being resolved, and in general there is a return to more “normal” business conditions.”

Specific to insurance Risk Strategies sees signs of optimism as rates moderate in casualty, management liability, and cyber, adding that businesses with a good risk profile will have a competitive advantage.

Conversely, property rates, particularly in Florida and California, are increasing while capacity and coverages are limited. Other catastrophe-exposed areas are not immune.

Insurance carriers remain disciplined and are looking to manage capacity, control terms and conditions, and adequately price risks. When considering where to utilise, carriers seek additional underwriting, detail, and are closely scrutinising risk control measures and the client’s focus and commitment to risk management.

Risk Strategies offered a number of recommendations for how companies can build resilience in 2023:

· Business and individual resilience – Act to fully understand and manage your risk profile. Work with a specialty broker to holistically understand your risks and protect your assets.

· Insurance resilience – Consider alternative risk financing options if traditional insurance does not meet your needs. Many of our clients are exploring captives and other self-insurance options. A specialty broker can evaluate your risk through the lens of both your business and risk underwriting.

· Talent resilience – Build an engaged, productive workforce. Your people are your number one asset. Employee culture and engagement are crucial to attracting and retaining talent. There is increased pressure today amidst changing employer/employee dynamics, and major movements such as the Great Resignation, quiet quitting, and employee expectations for behavioural health and wellness. We have all dealt with major upheavals the past few years with the COVID-19 pandemic, remote work dynamics, and now changing norms and employees’ expectations. An employee benefits specialist can inform and advise you.

“As I reflect on current events and what is happening in the world, risk is not going anywhere,” said John Mina, chief executive of Risk Strategies. “We urge our clients to think holistically about their business goals and the risks they face, and to take action to manage those risks. Stabilise and develop a comprehensive plan to ensure future resilience and enhance your ability to weather ongoing volatility.”