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Aon released its Q2 Global Insurance Market Insights report that looked at events in the second quarter of 2024 that were likely to shape the insurance market going forward.
The report, which focused on underwriting pricings and renewals ahead of the Monte Carlo Rendez-Vous de Septembre in two weeks, said that key findings from the report for the UK market included softening market conditions.
The report also offered insights into risks for more parts of insurance business including investment teams.
Aon said the UK’s soft market continued to expand to a wider area of the market, which would lead to a more favourable pricing and underwriting environment for many risks.
“However, challenges continued in pockets,” it said in regard to certain general lines of underwriting business. Insurers, the report noted, continued to look for growth and were taking advantage of investments in renewable energy and infrastructure projects.
This is relevant for investment teams at insurers as well as underwriters.
The report specified that the market is seeing the benefits of a more stabilised global economy after years of volatility.
Key factors that drove this improvement in overall market conditions included strong insurer results, which have been widely reported in recent weeks with many seeing ‘record’ results.
For instance, Aviva, arguably the UK’s largest insurer, said it had an “excellent first half” in its H1 results press release. It also said it had “Double digit growth in operating profit, cash remittances and capital generation” and had a “Confident outlook for 2024 and beyond”.
“Natural catastrophe insured losses remain volatile while adverse reserve development and social inflation make for an uncertain casualty outlook."
Globally, the report concluded that reinsurance renewals have seen a steady improvement, with increased capacity and reinsurer appetite leading to rate reductions for Property catastrophe risk and improvements in terms and coverage at mid-year.
This comes amid an already very active hurricane season in the Atlantic. Though, so far, "insurers and reinsurers' losses from Hurricane Debby are expected to be in the low single-digit billions of dollars, a figure that would be "very manageable" for the industry", said Gallagher Re in a report.
“Natural catastrophe insured losses remain volatile while adverse reserve development and social inflation make for an uncertain casualty outlook,” said the report. “A material deterioration in Casualty loss trends, and outsized natural catastrophe losses could materially impact future insurance and reinsurance market dynamics.”
The report added that “a capacity-rich market focused on sustainable growth and programme stability is good for our clients, many of whom are taking advantage of the current market conditions by restoring coverages and limits that had been reduced during recent renewals”.
In Asia, the report focused on market trends for new business such as photovoltaic and lithium-battery risks becoming a more challenging environment based on past losses.
In the EMEA region, the report said the market would have to adapt as it came to grips with its new soft market reality. Elsewhere it listed inflation as still a key market concern in South Africa and in the Pacific natural catastrophe and cyber were the main issues for the market.
The report said that for the North American market that “conditions are becoming more buyer-friendly, characterised by healthy competition, abundant capacity and incumbent insurers seeking to retain renewals and potentially expand their market participation”.
“The insurance market remained growth-orientated yet disciplined as insurer strategies focused on pricing for profitability and programme stability."
“Most insurers have growth targets, and some sought to impose rate increases on renewal risks while competing more aggressively on new business,” it said.
It also listed the LATAM market as becoming more stabilised.
“The insurance market in Q2 2024 remained growth-orientated yet disciplined as insurer strategies focused on pricing for longer-term profitability and programme stability,” said Joe Peiser, global CEO of Commercial Risk at Aon in the report. “Insurer growth ambitions continued to translate into a competitive, well capitalised market environment characterised by continued price moderation, underwriting flexibility, and the availability of coverage options.”
