North America sees buyer-friendly conditions as competition grows

Buyer-friendly conditions continued across much of the North American insurance market, driven by healthy competition, according to Aon. In Latin America, pricing increased for reinsurance-dependent risks, aggravated risks, and natural catastrophe exposures, but capacity was sufficient overall.

Aon’s Q2 2024: Global Insurance Market Overview noted that in North America, the property market moderation gained momentum, with average pricing hovering near flat in the US and modestly up in Canada. Aon said the US saw its most favourable market since Q3 2017.

“Clients with shared and layered placements, particularly those in desirable classes with profitable historical loss ratios and natural catastrophe exposures (minimal or heavy but excluding Florida), experienced healthy competition and flexible underwriting, and oversubscription was common. Positive market conditions allowed for the correction of non-concurrency in terms – a condition that had to be accepted on some placements in recent years due to capacity constraints,” said Aon.

Casualty pricing, particularly for US auto and umbrella, remained challenging, with many risks continuing to see double-digit rate increases and increased umbrella attachment points as insurers respond to adverse litigation trends, Aon noted. It said the Canadian market saw conditions easing in the excess market while improvements in the primary market lagged.

There were rate decreases in the single to low double digits for cyber placements. “Despite rising claims, the cyber insurance market remained buyer friendly, with significant savings in high excess layers, driven by improved cyber controls and past market adjustments. Underwriting remained rigorous and, despite competition in the market, the expectation for minimum cybersecurity controls continued,” said Aon.

There were also rate decreases in the single to low double digits for D&O, which saw healthy competition and stable coverage, although the broker noted that high excess layers were less likely to see price decreases.

Brazil and Colombia experienced a moderate environment, with specific challenges related to complex and high-risk sectors such as oil & gas, said Aon. Pricing increased for reinsurance-dependent risks, aggravated risks, and natural catastrophe exposures, but despite this, the Argentina market showed cautious optimism driven by potential export growth, contributing to a positive FX impact, said Aon.

Chile and Brazil experienced some capacity reductions for high-risk exposures and poorly performing risks, the broker said, with Chile’s motor market and Colombia’s casualty and D&O markets moderated or expanded. According to Aon, cyber capacity expanded across the Latin American region, and insurers demonstrated significant interest in new products, driven by increased awareness of cyber incidents.

The Pacific region has seen a generally more positive market environment, according to Aon, as market conditions continued to stabilise. However, the broker said there remain pockets of the market that remained challenged, in particular casualty risks with heavy US exposures and natural catastrophe-exposed property risks.

Aon said the tightening of property terms and conditions observed over the last several years has slowed, but higher risk and loss-active risks, and risks in certain sectors, were challenged as insurer appetite and supply remained limited.

Finally, the broker noted that the cyber market in the Pacific region has materially improved over the last 12 months and was soft in Q2. “It remains to be seen how current compounding factors such as the increasing number of cyber incidents and insured losses, as well as lower barriers to entry for criminals seeking to exploit organisations, may impact the market in the future,” said Aon.