The global insurance market continued its growth trajectory in Q2 2024, supported by strong profitability reported by many insurers in 2023 and improvements in the reinsurance sector.

According to the latest report from Aon, the market has remained focused on disciplined underwriting and pricing strategies aimed at long-term profitability and program stability. Insurers’ growth ambitions have contributed to a competitive and well-capitalized environment, with pricing remaining moderate, underwriting flexible, and coverage options available, particularly for preferred risk categories.

During the second quarter, competition driven by insurers’ growth ambitions created favorable conditions in the real estate market for many risks. The U.S. market, in particular, saw its most favorable conditions in nearly seven years, with pricing outcomes for desirable risks ranging from single-digit increases to low double-digit declines.

However, market conditions were more challenging in regions such as the Nordics, Brazil and Mexico, as well as in some high-risk sectors, where employment outcomes were less favourable.

Aon noted that its exposures to U.S. casualties, both domestic and international, have faced increased scrutiny due to concerns about reserve deterioration from prior years, ongoing nuclear-related issues and adverse litigation trends.

US-related risks, particularly in heavy industries, have seen price increases, more restrictive terms and conditions, and higher linkages to umbrella insurance. By contrast, well-performing risks and those with no US exposure have generally benefited from healthy competition as insurers seek growth opportunities.

“A capacity-rich market focused on sustainable growth and program stability is good news for our clients, many of whom are taking advantage of current market conditions by restoring coverages and limits,” said Aon Chief Commercial Risk Officer Joe Bezer (pictured above).

The D&O and cyber insurance markets remained healthy and well-capitalized. However, some D&O insurers, particularly those focused on program stability, were less inclined to cut rates, especially in the higher surplus tiers.

Despite the rise in claims, the cyber insurance market has remained favorable for buyers, with cost savings continuing, particularly in the higher surplus tiers. Aon has seen growing interest in cyber insurance outside the US and Europe, reflecting increased awareness of cyber incidents and expanding capacity.

Reinsurance renewals in 2024 have seen steady improvement, as highlighted in Aon’s latest Reinsurance Market Dynamics report. Increased capacity and reinsurers’ appetite have led to lower rates for property catastrophe risks and improved terms and coverage midway through the year.

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Reinsurance capital reached a new record high of $695 billion at the end of the first quarter of 2024, driven by retained earnings, asset redemptions and new inflows into the catastrophe bond market, with insurance-linked securities (ILS) capital reaching an all-time high of $110 billion in the second quarter.

Despite the overall strong capitalization of the insurance and reinsurance markets, Aon noted ongoing challenges, particularly around natural catastrophe losses and developing accident reserves. The record 37 natural catastrophe events in 2023, each exceeding $1 billion in insured losses, underscored the volatility in the sector.

In addition, negative reserve developments and social inflation contribute to an uncertain outlook for Casualty. Aon is closely monitoring the outlook for the 2024 Atlantic hurricane season, which is expected to be active, and any significant shocks from natural disasters or Casualty’s loss trends could materially impact future market dynamics.

The current market, rich in capacity and focused on sustainable growth and program stability, presents opportunities for customers to restore coverages and limits that were reduced in previous renewals.

Aon said the increased availability of advanced analytics enhances clients’ confidence in implementing the right mix of traditional and alternative risk solutions and optimal coverage structures, in line with their evolving risk strategies.

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