In the third quarter of 2023, the global insurance market witnessed a dynamic landscape, as outlined in the latest insights provided by Aon.
Several key factors shaped the market during this period, influencing pricing, capacity, underwriting practices, limits, deductibles, and coverages across various insurance products.
Adverse claims trends exerted upward pressure on pricing in Auto and Casualty segments. Conversely, the Cyber and Directors and Officers markets experienced a softening trend, driven by incumbent insurers’ efforts to retain and expand their portfolios, reports the broker.
Additionally, property pricing remained volatile due to concerns related to inflation, high reinsurance costs, climate change, and natural catastrophe exposures. The USA-exposed risk on non-USA placements continued to face challenges, says Aon.
Capacity was generally sufficient across most products and risk types, with established insurers expanding their appetite, and other insurers re-entering markets for growth.
However, capacity for Natural Catastrophe-exposed Property risks remained constrained and expensive, leading to increased adoption of alternative solutions such as index-based products, self-insurance, and captives.
Insurers prioritised profitable growth, leading to a shift from strict underwriting stringency to increased flexibility while maintaining discipline.
Underwriters focused on individual risk profiles, controls, and performance. Risk quality and differentiation remained top priorities, with the increasing prevalence of data and analytics supporting decision-making.
Early engagement with insurers and comprehensive submission details, including valuation methodologies, risk control practices, improvements, and lessons learned from past claims, contributed to superior results.
Most placements renewed with expiring limits and sub-limits. Property limits faced upward pressure due to economic inflation, impacting Auto and Casualty limits as well.
Larger limits were available on Cyber and Directors and Officers placements, reflecting clients’ efforts to restore limits reduced in recent years. Expiring deductibles were achieved on most placements, although adjustments were required on poor-performing risks and higher-risk sectors.
Insurers leveraged coverage terms as a differentiator, offering enhancements in areas targeted for growth. However, certain exclusions, such as Communicable Disease, War, and Territory restrictions, remained non-negotiable.