Aon report provides insurance market insights
A single major catastrophe event in 2024 could lead to a return to very hard insurance market conditions, a new Aon report warns.
The Q4 2023 Global Insurance Market Insights Report said increased capital in global insurance markets is largely because of favourable earnings as opposed to an influx of new capital.
The report said this indicates that there is some fragility to this market moderation, leaving the risk for market changes in the wake of a major event.
The report concluded: “Pricing was moderate but remained pressured by economic and social inflation. Natural catastrophe-exposed property risks and liability risks with significant US exposures experienced ongoing challenges.
“Insurers continued to focus their appetite and capacity deployment, creating healthy competition and options for preferred risk types. Alternative risk transfer solutions gained momentum across both preferred and non-preferred risk types.”
“While the underwriting environment remained disciplined as respects valuations, risk quantification, and matters related to corporate responsibility, it was characterised by greater flexibility as insurers’ year-end growth targets approached.”
Aon said that economic inflation, a slow supply chain recovery, rising labour costs and persistent natural disaster activity pressured property loss costs and extended recovery periods in 2023.
Social inflation, “nuclear verdicts”, and litigation funding drove up liability losses — especially related to US exposures.
New automotive technologies and distracted driving continued to alter the auto risk landscape.
The regulatory environment became more complex and focused on addressing matters related to insurer solvency, cyber incident disclosures, and the use of generative Artificial Intelligence, among many other issues.
The economic, geopolitical and humanitarian events that shaped 2023 are expected to continue to evolve in 2024, and new trends should emerge, creating challenges as well as opportunities.
• For the complete Aon Q4 2023 Global Insurance Market Insights Report, see Related Media
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