As part of its Global Market Overview report, broker Aon has forecasts that key longer-term issues are likely to gain relevance in re/insurer appetite and rating models, as the world emerges from the COVID-19 pandemic and as pricing momentum slows.
Aon is predicting moderation in rate increases as re/insurers begin to re-prioritise growth over portfolio remediation and as new capacity continues to flow into the market, particularly as pandemic losses have not materialised to the extent some feared.
This will likely result in re/insurers focusing their attention on Environmental, Social and Governance (ESG) issues, supply chain resilience, the increase in frequency and severity of weather related events, and Special Purpose Acquisition Companies (SPACs), Aon says.
Looking at North America specifically, analysts believe there are signs that more moderate conditions are emerging, following a prolonged period of escalated pricing caused by myriad factors including rising loss costs and low interest rates.
In this region, changes in insurer leadership have led to strategic and operational shifts, with notable observations including more rigorous and centralized underwriting, heightened claims scrutiny, and changes in appetite.
Meanwhile, in EMEA, conditions remain challenging but Aon sees a notable shift toward profitable growth and conditions are beginning to moderate in pockets.
In Latin America, uncertainty similarly remains high due to continued increases in COVID-19 cases and restrictions, and the market remains challenged by ongoing insurer profitability issues.
The local reinsurance market is also rewriting some books of business which could further constrain capacity, while underwriting processes and attitudes are becoming more conservative.
Turning to Asia Pacific, Aon observed that some insurers have rebalanced their portfolios and are looking to grow again while others continue to focus on remediation and a return to profitability.
For some buyers perceived as more attractive to the market, the broker also pointed to a growing gap that is starting to develop between renewal pricing from an incumbent insurer looking at portfolio remediation and a new insurer looking at the risk with fresh eyes.