In the third quarter of 2023, the world insurance market witnessed a dynamic scene, as outlined in the latest insights provided by Aon.
Many key factors shaped the market during this period, influencing pricing, capacity, underwriting practices, limits, deductibles, and coverages of various insurance products.
Poor claims trends have increased price pressure in the Auto and Casualty segments. On the contrary, the Cyber and Directors and Officers markets experienced a slow trend, driven by the incumbent insurers’ efforts to retain and expand their portfolios, reports the broker.
In addition, property pricing remains volatile due to concerns related to inflation, high reinsurance costs, climate change, and exposure to natural disasters. USA exposure to non-USA exposure continues to face challenges, Aon said.
Capacity is generally adequate in most products and risk types, with established insurers expanding their appetite, and other insurers re-entering markets for growth.
However, the capacity for Natural Catastrophe-Exposed Property risks remains constrained and expensive, leading to increased adoption of alternative solutions such as index-based products, self-insurance, and captives.
Insurers are primarily profitable growth, which has led to a shift from strict underwriting stringency to more flexibility while maintaining discipline.
Underwriters focus on individual risk profiles, controls, and performance. Risk quality and differentiation remain top priorities, with increasing amounts of data and analytics supporting decision-making.
Early engagement with insurers and comprehensive submission details, including valuation methods, risk mitigation strategies, improvements, and lessons learned from past claims , contributes to the best results.
Most placements are renewed with expiring limits and sub-limits. Property limits are facing upward pressure due to economic inflation, also affecting Auto and Casualty limits.
Greater limits are in Cyber and Directors and Officers placements, which reflect the efforts of clients to restore the limits that have been reduced in recent years. Expiring deductibles were achieved in most placements, although adjustments were required in poorly performing risks and higher risk sectors.
Insurers are leveraging coverage terms as a differentiator, offering improvements in areas targeted for growth. However, some exclusions, such as prohibitions on Communicable Disease, War, and Territory, remain non-negotiable.