Global insurance market moderates further in Q3 as insurers go for growth: Aon

The global commercial insurance market moderated further in Q3, with prices still rising a touch in most regions, but buyers can now access ample capacity backed by stable limits, deductibles and coverage, according to Aon. “While the Q3 insurance market continued to moderate as insurers sought to balance growth with profitability, divergent conditions among different risk types persisted,” the broker says in its Q3 Global Market Insights report. Favoured and well-performing risks, including significant portions of the financial lines market, saw an expansion of underwriting appetite and an increase in available capacity, the report explains. But higher-risk industries, natural catastrophe-exposed risks, loss-impacted risks and those not demonstrating mature risk management practices, saw the most significant rate increases and capacity constraints in the quarter, Aon adds. The broker’s report says that the average cost of commercial insurance was up between 1% and 10% in EMEA and the UK, North America and Latin America during the third quarter. Overall rates were flat in Asia Pacific. Aon says that adverse claims trends pressured pricing across auto and casualty, while cyber and D&O buyers experienced softening as incumbent insurers sought to retain and grow their portfolios. It adds that property pricing remained “volatile” due to concerns related to inflation, high reinsurance costs, climate change and nat cat exposures. Aon notes that pricing remains “challenging” for US-exposed property risks. But while pricing is still rising across most regions, overall capacity was described as ample. “Capacity was sufficient across most products and risk types as established insurers expanded their appetite, and other insurers (re)entered markets targeted for growth,” says Aon. But it warns that capacity for nat cat-exposed property risks remained constrained and expensive, driving continued use of alternative solutions including index-based products, self-insurance and captives. Aon says that underwriting stringency gave way to flexibility during Q3 as insurers focused on profitable growth. But carriers remain disciplined, with risk quality and differentiation a top priority. “Use of data and analytics to support decision making continued to gain prevalence. Superior results were achieved through early engagement with insurers and robust submission details, including descriptions of valuation methodologies, risk-control practices, improvements implemented, and lessons learned from past claims,” says the broker. It adds that limits were flat during the last quarter as most placements renewed with expiring amounts. However, property limits had to rise because of economic inflation, which, together with social inflation and “nuclear” liability verdicts, also impacted casualty limits. Larger limits were available on cyber and D&O placements as clients sought to restore those reduced in recent years. Flat deductibles were achieved on most placements, says Aon. However, increases and minimum deductibles were required on some poor-performing risks and higher-risk sectors. Aon says that lower deductibles were available on some well-performing classes, and risks during Q3 but were often declined by clients due to “incommensurate” additional premiums. Meanwhile, wordings and coverage were generally stable. Coverage enhancements, supported by quality underwriting data, were available in areas targeted for growth as insurers continued to leverage coverage terms as a differentiator, says Aon. But some exclusions, such as communicable disease, war and territory restrictions remained non-negotiable, it adds.

Global insurance market moderates further in Q3 as insurers go for growth: Aon

Rates up between 1% and 10% across most regions but property ‘volatile’

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