The global insurance market continues to shift to more moderate conditions, with modest price increases combined with growing capacity in many countries and for most products, according to Aon\u2019s Q2 2022 Global Market Insights Report.\r\n\r\nHowever, the report highlights concerns around record-breaking inflation, ongoing geopolitical instability, and widespread supply chain and labour challenges.\r\n\r\nThe report notes that modest price increases continued globally amid opposing market forces: \u201cThe impacts of rising inflation as well as continued supply chain and labour challenges pressured pricing upward, while improved insurer performance, the mobilisation of new capacity and insurer focus on portfolio retention and growth served to tamp down pricing.\u201d\r\n\r\nOn the capacity side, Aon says it has expanded globally and is now generally sufficient, apart, of course, for cyber, which is still seeing capacity shortages and major price increases in most regions. Property capacity is still a challenge for natural catastrophe exposed risks but has also contracted in some markets due to increased aggregate exposures and modelled portfolio loss potential.\r\n\r\nNorth America\r\nIn North America, pricing continued to moderate in the second quarter, with modest increases across most products and risk types, although overall premium increased more significantly due to growth in exposures and inflation. Capacity expanded and, according to Aon, was sufficient for most risk types, with the most notable exception of cyber coverage despite new capacity entering the US market, primarily in the high excess layers.\r\n\r\nCoverage limits are increasing, driven by increasing exposures as a result of inflationary pressures, and growing verdicts\/settlements in the US. Aon notes that underwriting scrutiny, rigour and discipline remained strong in the quarter, particularly around risk controls and valuations, and terms and conditions continued to tighten in response to geopolitical events in eastern Europe. It adds that social inflation and disruptions to the global supply chain continued to be key underwriting priorities.\r\n\r\nIn the US, most pricing increases were in the range 1%-10%, but cyber increases were in excess of +30%, while workers compensation pricing was flat and D&O was flat to slightly down.\r\n\r\nLatin America\r\nThe market continued to gradually stabilise, with modest increases across most lines across Latin America. But economic concerns related to rising inflation both in Latin America and the US, coupled with political concerns related to the presidential elections, tempered insurer optimism, says the broker\u2019s report.\r\n\r\nIt notes that pricing \u201cwas dependent on capacity source (local versus global\/reinsurance), risk complexity and performance, and the extent of adjustments made at recent renewals\u2026capacity remained generally sufficient, with the key exceptions of cyber, stock throughput and D&O for US-listed companies\u201d.\r\n\r\nThe broker went on: \u201cA continued focus on profitability drove underwriting rigour and conservatism, especially in the corporate segment. Underwriting escalation remained common, with some resultant delays. Extensive information was required as insurers focused on reducing volatility through best-in-class risk selection and limiting per-risk exposure.\u201d\r\n\r\nAsia\r\nOnce again, rate increases were generally modest in Q2 in Asia, with the key exceptions of cyber and higher-risk sectors and risks with adverse claims experience. Aon says that capacity expanded in some areas targeted for insurer growth and was relatively stable across most products, with the key exceptions of cyber and natural catastrophe-exposed property.\r\n\r\n\u201cInsurers sought growth and expanded their appetite in targeted areas but remained cautious of their bottom line. Quality and detailed underwriting information was a key enabler of superior renewal outcomes,\u201d Aon states in the report. \u201cClaims inflation continued to dominate insurer discussions, with the focus pivoting from longer-tail lines to all areas of risk transfer, with significant escalations in rebuild cost and delays.\u201d\r\n\r\nEurope\r\nIt is a similar story for Europe, the Middle East and Africa, with moderate price increases in the quarter, but with cyber seeing material rate increases. Cyber, together with D&O, also saw some capacity issues but generally capacity was sufficient elsewhere, while underwriting scrutiny remained high.\r\n\r\nCaptives\r\nThe condition of the global market in terms of pricing, deductible requirements and some capacity issues is seeing continued interest in captive solutions. In the introduction to the report, John English, chief executive officer, captive and insurance management, Aon, says the number of Aon captive feasibility studies \u2013 which increased by 50% between 2020 and 2021 \u2013 shows no sign of slowing in 2022.\r\n\r\n\u201cHistorically, high-frequency, low-severity products such as workers compensation, motor, and general liability were focal points for captive participation, but now, cyber, errors and omissions, and directors and officers frequently feature in captive feasibility assessments, as organisations look for alternative, strategic ways to manage these risks,\u201d he says.