Aon Q3 Report Highlights Buyer-Friendly Trends, Caution in Key Areas

Aon has released its Q3 2024: Global Insurance Market Overview, providing a comprehensive analysis of market trends influenced by developments during the third quarter of 2024. According to Aon, abundant capacity across most sectors has contributed to improved pricing and terms, with insurers focusing on profitable growth while maintaining disciplined underwriting strategies.

Key findings in the report emphasize the shifting dynamics of reinsurance. Aon highlights that while the reinsurance sector benefitted from improved conditions earlier in the year, recent natural catastrophes such as Hurricane Milton, with early loss estimates between $25 and $40 billion, have tempered expectations for rate reductions during the January 1 Treaty Renewal season.

In the realm of alternative risk transfer and insurance-linked securities, Aon notes a growing interest in parametric solutions and captive insurance. These mechanisms offer insureds tools to manage volatility and protect balance sheets, particularly amidst rising concerns over emerging risks such as political violence and environmental liability.

Cyber risk remains a prominent topic, with the report underscoring that ample capacity and competition in the cyber-insurance market have sustained a buyer-friendly environment. The CrowdStrike outage in July served as a reminder of the potential loss severity of such risks, yet underwriting trends have not shifted dramatically. Aon observed that insureds are leveraging favorable conditions to secure broader coverage and higher limits.

The casualty insurance sector, however, continues to grapple with the impacts of social inflation. Per Aon, liability claims in the United States have increased by 57 percent over the past decade, creating persistent challenges for insurers. Additionally, concerns over "forever chemicals" have led to the widespread application of exclusions, reflecting cautious underwriting practices.

Joe Peiser, global CEO of Commercial Risk Solutions at Aon, remarked on the evolving market landscape: "As we approach year-end renewals, the picture is largely a positive one. Abundant capacity has led to improved pricing and terms across wider swaths of the market. Healthy insurer returns and improved reinsurance conditions have restored insurer confidence and growth appetite. However, US casualty exposures remain a top underwriting priority and pricing concern globally, as the effects of social inflation continue to impact insurer profitability."

The report also discusses directors and officers (D&O) liability insurance, noting that soft market conditions have persisted, albeit with a shift toward long-term, sustainable pricing. Insureds are increasingly exploring enhancements to coverage and purchasing additional limits to take advantage of competitive pricing.

Aon's analysis emphasizes the importance of strategic risk management as the market evolves. Insureds are advised to maintain strong partnerships with insurers and to leverage advanced data and analytics to optimize program outcomes. As market conditions remain favorable for buyers, opportunities exist to refine insurance programs, particularly in areas such as cyber, D&O, and alternative risk solutions.

Find the full report here.