Positive news for Asian risk managers as softening continues: Aon

Aon has reported that the moderating insurance market conditions that emerged for most lines of property and casualty insurance across Asia during 2023 continued into the first quarter of 2024. Pricing and capacity in the property market showed “material improvement” said the broker in its latest Global Insurance Market Overview. The D&O market remained soft as it is also in Europe and North America, but the broker added that underwriting caution became more evident. Aon’s report concluded that insurer growth focus sharpened as year-end targets approached, but underwriting remained “disciplined” and risk differentiation gained further importance. This underlines the general impression seen worldwide that this is not a traditional across-the-board cyclical collapse as has been seen in the past. Aon stressed that across the region, market conditions were mixed, with renewal outcomes varying by line of business. Natural catastrophe property risks remained challenged while financial lines saw a general softening. The broker said that despite a “robust” international insurer presence in the region, opportunities remained for new entrants, particularly in niche products such as cyber, crypto and transaction solutions. “Capacity was sufficient as new insurers began writing specialty products either directly or through MGAs (which allowed insurers to reduce their entry costs),” commented Aon. Reinsurers sought premium and retention increases through the January 2024 renewal cycle, with increased treaty costs driving increases in the direct market. “The diversity inherent in the region continued to be exposed, with insurers struggling to provide consistency across either the different geographies or products. Market conditions remained challenging for natural catastrophe exposed property risks, where insurers continued to seek rate increases, as they are not positioned to absorb higher treaty reinsurance costs. The market for property risks that are not natural catastrophe exposed, and much of the balance of the market in general, has moderated or softened,” said Paul Young, head of Commercial Risk Asia. Aon’s latest analysis found that pricing varied widely based on product line and geography, with competition tending to pressure pricing downward, especially for risks with favourable loss histories. “Flat renewal pricing was generally available except where exposures leaned toward property in natural catastrophe zones; in such cases, insureds experienced rate increases,” said the broker. Across the region, capacity was generally sufficient for most risks; however, challenging risk types and some geographies experienced capacity limitations, particularly for natural catastrophe-exposed property risks. Singapore saw new international market entrants focused on growth. Underwriting was “prudent” as underwriters sought to differentiate risk quality, offering favourable terms mostly to preferred risk types. Underwriting was more conservative and stringent for US exposures and higher-risk profiles, said the broker. “Overall, expiring limits were available on most placements. Some client-selected decreases were observed as clients sought premium savings. In scattered cases where insurers reduced limits, co-insurance was leveraged to fill the resulting gaps. Limit increases were available on preferred risks,” said Aon. On deductibles, the broker said that overall, most placements renewed with expiring deductibles, with the notable exceptions of natural catastrophe property risks and client-selected deductible increases (to achieve premium savings). “Deductible increase options were often declined by insureds because the premium savings were deemed incommensurate with the additional risk,” said Aon. “Overall, expiring terms and conditions were available on most placements, and in some geographies and products, broader coverages were available, often for no additional premium. Per- and polyfluoroalkyl substances (PFAS) exclusions were imposed on liability risks regardless of confirmed PFAS exposures,” said Aon, underlining the sudden fear among underwriters globally on this fast-emerging risk area that is rapidly becoming the focus for action groups, lawyers and regulators.

Positive news for Asian risk managers as softening continues: Aon

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