2022 Insurance industry overview: Howden “Times Are A Changin’”


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Portfolio Plus - Insurance Update

In this update, we provide industry insight into 2022 from our Analytics team (which can be read in more detail in the Howden January 2022 renewal report  “Times are A Changin” report) and through this lens, we provide some pointers to assist Portfolio Companies in getting the most out of their 2022 renewal and planned M&A activity.

2022 Insurance industry overview: Howden “Times Are A Changin’”

Key Takeaways: higher inflation, low investment yields, climate change, elevated catastrophe loss activity and fluid cyber threats – are making the risk landscape more challenging to predict.

COVID losses: more clarity

The fallout from the COVID crisis has had a meaningful underwriting impact on the (re)insurance sector, although certain carriers have been more affected than others. Reported COVID losses have now reached a level equivalent to the third biggest catastrophe loss ever.

With more than USD 35 billion of (re)insured COVID-19 losses announced in 2020, 90% of which emanated from the P&C market (event cancellation and business interruption coverage predominantly), reported losses were much reduced in 2021. Only USD 1.2 billion of additional P&C claims were announced up to Q3 last year, whilst life claims increased by USD 5.5 billion, with more likely to come in 2022 due to the virus’ lingering impact on morbidity and mortality

In spite of its large scale and unexpected consequences, COVID industry losses have been eminently manageable. Even if Omicron results in further shutdowns, direct P&C underwriting impacts for previously affected areas such as property and contingency insurance will be reduced significantly by widespread communicable disease exclusions now in place. Perhaps the more enduring legacy of the pandemic for risk managers and underwriters will be altered risk perceptions, particularly for systemic events.

Climate: the new normal

Climate risk replaced COVID-19 to become the market’s pre-eminent concern in 2021, as another year of elevated catastrophe losses added further to evidence that climate change is influencing the frequency and intensity of certain perils.
Insured natural catastrophe losses exceeded USD 100 billion in 2021 and have now surpassed USD 450 billion in aggregate since 2017. The latest period of elevated catastrophe losses has been notable not only for its quantum but also for the unusual and mostly non-modelled nature of events.

Cyber: rampant ransomware

The cyber insurance market is encountering an equally challenged risk environment, bringing about a correction due to two key factors: ransomware incidents and the threat of aggregated and systemic attacks.
Ransomware will be remembered as the digital pandemic of 2021. The frequency and severity of incidents has grown significantly in recent years, with cyber criminals deploying new tactics and techniques in pursuit of one simple goal: to make money.

Renewals 2022:

Renewal graph

For 2022, we would recommend commencing the renewal process at least 4 months out and approach your renewal expecting:

  1. Coverage:

  • More restrictive coverage terms, including sublimits, higher retentions, coinsurance and exclusions
  • Ensure that any changes of coverage terms are clearly explained and any negative impact analysed for risk impact
  1. Time Commitment:

  • Expect to add 25% of the time committed for insurance placement
  • The current insurance market is making it difficult for existing buyers to get the cover they need and if looking into a new lines of insurance – such as cyber -  first-time buyers may struggling to secure any coverage at all.[CC1] 
  • Insurers are asking more questions and more information to be gathered for the underwriting submission, including both written answers to proposal forms and insurer/client meetings
  1. Insurers:

  • Look for early confirmation that existing insurers are looking to remain on your insurance programme
  • New insurers on the primary layer are more likely to lead to a price increase
  1. Pricing:

  • There were signs of let-up in 2021, as some of the more acute price rises moderated in the first half of the year, with cyber the standout exception. Rate movements have since ebbed and flowed, with pressure points emerging in areas subject to rising inflation and sizeable losses (e.g. property-catastrophe).
    This reflects market conditions confronting businesses currently. Frustration is now setting in for buyers subjected to multiple years of price rises, especially those who have improved risk profiles by de-risking and elevating risk management
  • The situation is likely to remain unstable in the near term but new capacity may lead to opportunities to stabilise pricing increases bringing in competition however some industries are still in distress – such as Construction, Healthcare and Hospitality.

During 2022:


Focus points for new acquisitions:

  1. Change of control clauses in Financial Lines policy
  • The change of control clause in the Directors and Officers policy (D&O) is a benefit to ensure a “run-off” policy/period is negotiated to cover past acts of the pre-acquisition board of directors/officers – and the existing insurer is normally open to providing a new D&O policy on similar terms and conditions. We are expecting in 2022 that insurers will continue to demand an increase for the pricing for the “run-off” periods and so budgets need to be adjusted for this rise (we have seen pricing for 6 year run-off being priced up to 400% of the annual premium) – and potentially insurers will also look to only offer periods of 1 or 3 years.
  • The change of control clause on Cyber policies do present potential problems and if the business is being acquired but still being operated as a stand alone business – then it is an option to ask for the change of control clause to be waived.
  • The cyber policy (along with the other insurances) will be reviewed by insurers who have been asked to provide any Warranty and Indemnity insurance so it is important for the Management team to have a plan in place for how cyber risks will be covered post acquisition and considerations in regards to how new acquisitions will be covered under any master/global policies in place.
  1. Transition into existing Portco insurance programme
  • For portfolio companies looking to acquire international subsidiaries/bolt-ons, the local insurance requirements will need to be reviewed and consideration given as to whether the newco can be integrated into the “master” policies or local policy kept in place or a combination of both.
  • Considerations for integration into the “master” policy should take into account the policy retention and terms and conditions comparing to what is standard in the local market.
  • Legacy risks of the newco should be reviewed especially relating to professional indemnity and liability. Cover for past acts may not be available under the existing cover so it should be discussed how these legacy risks are best covered.


  •  Insurers are looking more deeply into why companies are refinancing and if there is any private or listed debt placements, this should be notified to D&O insurers and the policy wording reviewed to ensure the policy covers for this. NB: the definition of “Securities” should include both debt and equity.


  • Insurer are focusing on ESG issues both for their own business but also looking at ESG impacts undertaken by clients. We recommend including ESG reports in underwriting submissions and expect insurers to start including specific questions to clients in particular relating to climate and energy disclosures and diversity and transparency of governance.


To date, U.S. based investors have led the way when it comes to Special Purpose Acquisition Company (SPAC) deals, thanks in part to tighter investment regulations and fewer potential sponsors in the UK and Europe, but that doesn’t look like it will remain the case, particularly as the UK moves to reform its listing and share class requirements following Lord Hill’s review1 . The last 6 months have seen a large uptick in the number of European SPAC listings with the majority focussing on acquiring European target companies.

Private Equity firms have seen a lot more interest from prospecting SPACs as a means of exit. As investor conviction in the ESG and emerging technology economy has grown over the last six months, the use of SPAC business combinations as an exit route has brought huge value to target companies. Significantly, the SPAC market continues to heat up, with 132 SPACs raising more than $139 billion2 . In the first two months of 2021, an additional 128 SPAC IPO’s have raised $38 billion in acquisition capital. Many Private Equity companies are now holding discussions with several potential SPAC acquirers, and we fully anticipate to see a large increase in this exit strategy in 2022. As the SPACs that listed in 2020/2021 come closer to the end of their two year acquisition window, competition will begin to heat up.

London Market insurers remain extremely cautious around SPAC exposure given the SPAC litigation arising out of the US. This means SPAC activity is now being excluded as standard, from Investment Management Insurance policies and Portfolio company’s D&O coverage3. For this reason, we recommend speaking to your Howden contact with regard to avoiding any gaps in coverage, if considering  the SPAC exit route.

[1] March 2021,

[2] Skadden, January 2022,

[3]Crunchbase News, July 2021,