Aon sees improved global pricing and abundant capacity as renewals approach

Abundant capacity has led to improved pricing and buyer-friendly conditions across much of the global insurance market, according to Aon, and this paints a largely positive picture as buyers head into year-end renewals.

“Through Q3 2024, buyer-friendly conditions have continued across much of the global insurance market and even picked up pace in some segments. Healthy insurer returns and improved reinsurance conditions have, over the course of the year, continued to restore insurer confidence and growth appetite, helping drive competition, especially for the most attractive risks, says Aon in its report, Q3 2024: Global Insurance Market Overview.

It notes the impact of Hurricane Milton, but says the event should be manageable for the (re)insurance industry, although it now seems unlikely that the reinsurance rate reductions that were expected for the 1 January treaty renewal season will materialise.

Joe Peiser, chief executive officer, commercial risk, Aon, said: “As we approach year-end renewals, the picture is largely a positive one. Abundant capacity has led to improved pricing and terms across wider swathes of the market.”

Cynthia Beveridge, global chief broking officer, Aon, added: “With insurers focused on growth, now is the time to address any insurance programme concerns and discuss desired enhancements, as well as explore alternative risk transfer methods.”

There are some challenges for buyers across parts of the market that have been impacted by rising claims costs, such as natural catastrophe exposed property risks, automobile placements, and US-exposed casualty risks, where social inflation continues to impact insurer profits and strategies, and US-exposed risk, where social inflation is a major concern. Casualty insurers are also taking a prudent approach to emerging risks, such as PFAS.

In other lines there is ample capacity, for example cyber, where competition is fuelling a buyer-friendly market and creating opportunities for insureds to reassess their coverage needs, says Aon. Similarly, robust capacity in the D&O market has continued to support favourable conditions for D&O buyers, though the broker notes that insurers have begun to focus on longer-term, sustainable pricing.

Looking at the third quarter of 2024, Aon says that most lines of business and geographies saw moderating or improved pricing, while capacity is sufficient to meet demand in almost all lines of business and regions, although there are some ongoing constraints for natural catastrophe and certain occupancies in property, and a tightening of capacity for US excess liability risks.

In terms of regions, Aon says EMEA is seeing buyers continue to benefit from improved market conditions, particularly on D&O and cyber placements, mid-sized risks, and risks without US exposures. There are some underwriting concerns including systemic risk, PFAs and exposures related to strikes, riots and civil commotion.

In the US, the casualty environment is bifurcated, with moderate conditions for general liability and workers compensation and more challenging conditions in auto and umbrella/excess liability. Property rates continue to moderate, with healthy levels of competition for well-managed risks with good loss ratios.

Asia market conditions are becoming more favourable across most regions and lines of business in Asia, with the exception of Japan and natural catastrophe coverages in some geographies, says Aon. Japanese corporates have faced a period of price increases and limited capacity in key lines as domestic insurers focus on underwriting profitability.

“With insurers focused on growth, now is the time to address any insurance programme concerns and discuss potential enhancements, as well as explore alternative risk transfer options such as parametric solutions and captives,” says Aon. “Growth-minded insurers are now more open to dialogue about meeting clients’ future coverage needs, especially in areas like energy transition.”

Aon concludes by recommending that buyers “work with trusted partners who understand your risks, have a proven track record of paying claims and are willing to customise coverage. Maintaining strong relationships with insurers is key to managing the market cycle over the long term, and we suggest pressure-testing the sustainability of offerings from new or opportunistic insurers, particularly if replacing a long-standing insurer.”