Q3 2024: Global Insurance Market Overview

Q3 2024: Global Insurance Market Overview
October 25, 2024 17 mins

Q3 2024: Global Insurance Market Overview

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Buyer-friendly conditions continued across much of the global insurance market in Q3, painting a largely positive picture as we head into year-end renewals.

Key Takeaways
  1. Healthy insurer returns and improved reinsurance conditions have continued to restore insurer confidence and growth appetite, helping to drive competition.
  2. With insurers focused on growth, now is the time to address any insurance program concerns and discuss potential enhancements, particularly for Cyber and Directors and Officers.
  3. However, U.S. Casualty exposures remain a top underwriting priority and pricing concern globally, as the effects of social inflation continue to impact insurer profitability.

A buyer-friendly market provides opportunities as we approach year-end renewals

Through Q3 2024, buyer-friendly conditions have continued across much of the global insurance market and even picked up pace in some segments. Healthy insurer returns and improved reinsurance conditions have, over the course of the year, continued to restore insurer confidence and growth appetite, helping drive competition, especially for the most attractive risks.

As we ready this report for publication, we are reviewing the very preliminary assessments of the impact of Hurricane Milton. Early estimates are in the $25-$40 billion range, which is significant, but not a doomsday scenario. At that level, the event should be manageable for the insurance and reinsurance industry as a whole. No doubt, some domestic Florida insurers will face jeopardy. It seems unlikely that the reinsurance rate reductions that were expected for the January 1 Treaty Renewal season will materialize.

As we approach year-end renewals, the picture is largely a positive one. Abundant capacity has led to improved pricing and terms across wider swaths of the market. For example, well-performing Property risks are increasingly oversubscribed and modest price reductions are available, while many clients are choosing to take advantage of favorable Cyber market pricing by purchasing additional limit. Competition for these and other preferred risk types is expected to accelerate in a growth focused Q4 market.

While the pendulum has swung back toward buyers, underwriting remains disciplined for the time being. The mantra among insurers has been “profitable growth” and, for the most part, underwriters continue to be selective and focused on well-managed quality risks. This means that challenges are continuing across significant pockets of the market that have been impacted by rising claims costs, such as natural catastrophe exposed Property risks, Automobile placements, and U.S. exposed Casualty risks.

Caution is the watchword for Casualty. Social inflation continues to impact insurer profits and strategies, and U.S. exposed risk, where social inflation is most prevalent, remains a top underwriting and pricing concern globally. According to the Swiss Re Institute, social inflation has increased liability claims in the U.S. by 57 percent in the past decade. Until there is robust legal reform in the U.S., we expect that insurers will continue to tread carefully in tort exposed lines. Casualty insurers are also taking a prudent approach to emerging risks, such as forever chemicals (per- and polyfluoroalkyl substances (PFAS)) and everywhere chemicals (Phthalates). Settlements from PFAS litigation in the U.S. have already reached $18 billion and are expected to exceed $100 billion, according to Verisk. As related litigation gains momentum, insurers are seeking to address these exposures through coverage clarifications and exclusions.

Other key trends we observed in the last quarter include:

  • The CrowdStrike outage in July served as a timely reminder of the potential loss severity that comes along with cyber and technological risk and we expect to see further increases in demand for Cyber insurance and Tech Errors & Omissions insurance. The event has not created any immediate reversal in Cyber underwriting trends, with ample capacity and competition fueling a buyer friendly market and creating opportunities for insureds to reassess their coverage needs in this increasingly important line of insurance.
  • Robust capacity in the Directors & Officers (D&O) market has continued to support favorable conditions for D&O buyers, but after a prolonged period of softening, insurers have begun to focus on longer-term, sustainable pricing. Now is a good time to work with your Aon team to identify potential coverage enhancements and evaluate limits and deductibles.
  • Political risks remain top-of-mind for both insureds and insurers. Amidst ongoing unrest in many parts of the world and in anticipation of upcoming U.S. elections, some buyers are reviewing policies with regard to cover for political violence. Having experienced several large surprise losses, insurers are continuing to restrict Property coverages related to Strikes Riots and Civil Commotion, War, and Coverage Territory.

With insurers focused on growth, now is the time to address any insurance program concerns and discuss potential enhancements, as well as explore alternative risk transfer options such as parametric solutions and captives. Such solutions have become increasingly important tools for risk managers and can help companies not only insure their risk and manage volatility but protect their balance sheets and create a foundation for growth. Growth minded insurers are now more open to dialogue about meeting clients’ future coverage needs, especially in areas like energy transition.

A final word of caution: with the market in flux, it pays to consider the long-term value of insurer relationships. We always recommend working with trusted partners who understand your risks, have a proven track record of paying claims and are willing to customize coverage. Maintaining strong relationships with insurers is key to managing the market cycle over the long term and we suggest pressure-testing the sustainability of offerings from new or opportunistic insurers, particularly if replacing a long-standing insurer.

On behalf of our global Commercial Risk team, we hope you find the information in our Q3 Global Insurance Market Insights helpful in understanding recent developments in the risk and risk-solution environment as you look for opportunities to reinforce your strategies and grow.

Quote icon

As we approach year-end renewals, the picture is largely a positive one. Abundant capacity has led to improved pricing and terms across wider swathes of the market.

Joe Peiser
Joe Peiser
Chief Executive Officer, Commercial Risk

Insurance Market Overview

Expand the options below to read a summary of how the insurance market trended in Q3 2024 across pricing, capacity, underwriting, limits, deductibles and coverages.

  Pricing Capacity Underwriting Limits Deductibles Coverages
Asia -1-10% Ample Prudent Flat Flat Stable
EMEA -1-10% Ample Prudent Flat Flat Stable
Latin America Flat Abundant Prudent Flat Flat Stable
North America Flat Ample Prudent Flat Flat Stable
Pacific -1-10% Ample Prudent Flat Flat Stable
  • Pricing

    Buyer-friendly market conditions continue, with most lines of business and geographies seeing moderating or improved pricing in Q3. Insurer growth ambitions continue to drive price competition for well-managed, loss-free Property risks, as well as for Cyber and Directors & Officers placements, although decreases in the latter show signs of decelerating. Auto and U.S. Excess Liability/Umbrella rates have increased to reflect loss trends and concerns related to social inflation, while higher-hazard and catastrophe exposed Property risks have continued to face upward pressure, albeit moderating.

  • Capacity

    Capacity is sufficient to meet demand in almost all lines of business and regions, although there are some ongoing constraints for natural catastrophe and certain occupancies in Property, and a tightening of capacity for U.S. Excess Liability risks. Abundant capacity has continued to drive competition in Cyber and Directors & Officers, and shared/layered Property programs in the U.S. are generally oversubscribed.

  • Underwriting

    Despite broadly competitive market conditions, underwriting remains disciplined across much of the market as insurers target profitable growth. Risk differentiation remains a priority for insurers; robust, detailed information on valuations, exposure location, claims history, and risk management actions/controls continue to be required. In preferred geographies and risk types, and areas targeted for growth, underwriting tends to be more flexible.

  • Limits

    Expiring limits are available for most placements, although some insureds are taking advantage of more favorable conditions by purchasing higher limits, especially for Cyber, and by reducing the number of participants on Property slips. In some countries, high Casualty limits may not be available for clients with U.S. exposures.

  • Deductibles

    Deductibles have been broadly stable, with most placements renewing as expiring. The ability to ‘buy down’ retentions in Cyber continues where robust cyber security and cyber hygiene are demonstrated. Upward pressure continues for some poorly performing risks.

  • Coverages

    Expiring coverages remain available for most placements, and insurers are more flexible on risks where growth appetite is strongest. Growing competition also facilitates the resolution of non-concurrency of terms that arose during the hard Property market. In the Liability market, PFAS exclusions are being widely applied, while coverage for Property risks based in Ukraine, Russia, Eastern Europe and Myanmar continues to be restricted. The recent CrowdStrike outage and upcoming U.S. elections are leading some insureds to review Property policies with regards to cover for cyber events and political violence.

Insurance Product Trends

Expand the options below to read a summary of how the insurance market trended in Q3 2024 across key lines of business, including Automobile, Casualty/Liability, Cyber, Directors & Officers and Property.

  Automobile Casualty/Liability Cyber Directors & Officers Property
Asia Moderate Moderate Moderate Soft Moderate
EMEA Moderate Moderate Moderate Soft Moderate
Latin America Moderate Moderate Soft Soft Moderate
North America Challenging Moderate Soft Soft Moderate
Pacific Moderate Moderate Soft Soft Moderate
  • Automobile

    Amid rising claims costs, conditions have been generally moderate-to-challenging, depending on the region. Supply chain challenges, inflationary pressures, and the growing use of advanced technology in vehicles is driving higher repair and claims costs, albeit at lower levels than those experienced in 2023. Large fleets in the U.S. – which are also exposed to the effects of social inflation – have faced some of the most significant price increases, although there are opportunities to manage increases in rate through alternative risk solutions. Electric vehicles remain an area of focus, especially in Asia, where new brands continue to enter the market.

  • Casualty/Liability

    The Casualty market is broadly competitive with ample capacity and moderate conditions in most segments and lines of business. The main exceptions are U.S. Casualty and U.S.-exposed International Casualty, where insurers remain cautious due to loss trends and social inflation. U.S. Excess Liability has been experiencing significant rate increases, including re-pricing of intermediate layers, combined with capacity limitations. Insurers have identified PFAS as a specific area of concern and are applying exclusions on a broad basis in most regions.

  • Cyber

    Healthy levels of competition and capacity are fueling a buyer’s market for Cyber. Pricing has continued to soften, yet underwriting is disciplined, and risk differentiation and detailed underwriting information are required for a positive renewal outcome. A growing number of insureds are taking advantage of favorable market conditions to purchase additional limits, using data and analytics to support their decisions. The recent Crowdstrike outage has yet to result in material changes in the market.

  • Directors & Officers

    Market conditions are soft, driven by abundant capacity. Pricing remains competitive, although rate decreases have decelerated as insurers shift their focus toward longer term, sustainable pricing. Some insureds are opting to purchase additional limits given current favorable market conditions. The potential implications of artificial intelligence (AI) for Directors & Officers risks are a topic of growing interest for the market.

  • Property

    Overall, conditions in the Property market have continued to moderate. Insurer growth ambitions are leading to more aggressive pricing for well-performing and lower-risk clients in most markets, although catastrophe exposed and higher-risk occupancies face more rigorous underwriting, and in some cases capacity constraints. The recent CrowdStrike outage and various political risks are leading some insureds to review property policies with regard to cover for cyber events and political violence. Strikes Riots and Civil Commotion restrictions are largely being maintained.

Quote icon

With insurers focused on growth, now is the time to address any insurance program concerns and discuss desired enhancements, as well as explore alternative risk transfer methods.

Cynthia Beveridge
Cynthia Beveridge
Global Chief Broking Officer

Insurance Market Trends by Region

Expand the options below to read a summary of regional insurance market trends in Q3 2024.

For more detailed analysis, download and read the full report here.

  • Asia
    • Market conditions are becoming more favorable across most regions and lines of business in Asia, with the exception of Japan and natural catastrophe coverages in some geographies.
    • Japanese corporates have faced a period of price increases and limited capacity in key lines as domestic insurers focus on underwriting profitability.
    • Cyber and Directors & Officers continue to benefit from abundant capacity and healthy competition across the region. The global CrowdStrike outage in July 2024 has not created any immediate reversal in underwriting trends and has served as a timely reminder of the loss severity nature of this risk category. We encourage our clients to review Aon’s cyber risk insights and recommendations that we have published in response to the CrowdStrike event.
    Q3 Asia Market Dynamics
      Overall Pricing Capacity Underwriting Limits Deductibles Coverages
    Asia Soft -1-10% Ample Prudent Flat Flat Stable
    China Soft -1-10% Abundant Prudent Flat Flat Stable
    Hong Kong Soft -1-10% Ample Prudent Flat Flat Stable
    Japan Challenging +1-10% Constrained Rigorous Decreased Flat Stable
    Singapore Moderate -1-10% Ample Prudent Flat Flat Stable
    Thailand Moderate Flat Ample Prudent Flat Flat Stable
    Q3 Asia Product Trends
      Automobile Casualty/Liability Cyber Directors & Officers Property
    Asia Moderate Moderate Moderate Soft Moderate
    China Challenging Soft Moderate Soft Soft
    Hong Kong Moderate Soft Soft Soft Soft
    Japan Moderate Challenging Challenging Moderate Challenging
    Singapore Challenging Moderate Soft Soft Moderate
    Thailand Soft Moderate Moderate Moderate Moderate
  • Europe, Middle East and Africa
    • Clients continue to benefit from improved market conditions, particularly on Directors & Officers and Cyber placements, mid-sized risks, and risks without U.S. exposures.
    • Key underwriting concerns include:
      • Systemic risk: Underwriters have continued to evaluate, scrutinize, and in some instances limit the coverage offered for critical infrastructure, systemic and/or correlated events, and war.
      • PFAS (Casualty): Insurers have continued to introduce policy exclusion language to address this exposure.
      • Corporate responsibility (ESG) requirements: For example, climate risk is a key focus in the U.K., with negotiations for cover that allows clients to rebuild properties aligned to modern “green standards”.
      • Exposures related to Strikes, Riots and Civil Commotion.

        • However, underwriting conservatism related to economic inflation has subsided, with the key exception of South Africa.
    • As operational costs rise and serve to squeeze profitability, cost management is coming into sharper focus for clients. This is leading to greater interest amongst clients in Alternative Risk Transfer solutions (including parametrics).
    Q3 EMEA Market Dynamics
      Overall Pricing Capacity Underwriting Limits Deductibles Coverages
    EMEA Moderate -1-10% Ample Prudent Flat Flat Stable
    D-A-CH Moderate +1-10% Ample Prudent Flat Flat Stable
    Iberia Soft -1-10% Abundant Flexible Increased Flat Stable
    Italy Moderate +1-10% Ample Rigorous Flat Flat Stable
    Middle East Soft -1-10% Ample Prudent Increased Flat Broader
    Netherlands Moderate Flat Abundant Flexible Increased Flat Stable
    Nordics Moderate Flat Ample Prudent Flat Flat Stable
    South Africa Moderate +1-10% Ample Prudent Flat Flat Stable
    United Kingdom Soft -11-20% Abundant Flexible Flat Flat Stable
    Q3 EMEA Product Trends
      Automobile Casualty/Liability Cyber Directors & Officers Property
    EMEA Moderate Moderate Moderate Soft Moderate
    D-A-CH Challenging Moderate Soft Soft Moderate
    Iberia Challenging Soft Soft Soft Moderate
    Italy Challenging Soft Moderate Soft Moderate
    Middle East Moderate Moderate Soft Soft Soft
    Netherlands Moderate Moderate Soft Moderate Moderate
    Nordics Not Applicable Moderate Moderate Soft Moderate
    South Africa Moderate Moderate Moderate Moderate Moderate
    United Kingdom Moderate Moderate Soft Soft Soft
  • Latin America
    • Market conditions are moderate overall, characterized by sufficient capacity and pricing hovering near flat for most renewals. Coverage terms and conditions, including restrictions, are generally renewing as per expiring. Significant natural catastrophe losses including Hurricane Otis and floods in Brazil have increased underwriting caution.
    • Parametric solutions, captives and other alternative risk transfer options are gaining traction across the region.
    • Client interest in Construction and Surety coverages is waning due to investment delays and uncertainty in regulations in Andean Countries while new regulations in South America are leading to greater demand for Cyber coverage.
    Q3 Latin America Market Dynamics
      Overall Pricing Capacity Underwriting Limits Deductibles Coverages
    Latin America Moderate Flat Abundant Prudent Flat Flat Stable
    Argentina Moderate +1-10% Ample Rigorous Flat Flat Stable
    Brazil Soft -1-10% Abundant Flexible Flat Flat Stable
    Chile Moderate Flat Ample Prudent Flat Flat Stable
    Colombia Soft -1-10% Abundant Prudent Flat Flat Stable
    Mexico Challenging +1-10% Constrained Prudent Flat Flat Stable
    Q3 Latin America Product Trends
      Automobile Casualty/Liability Cyber Directors & Officers Property
    Latin America Moderate Moderate Soft Soft Moderate
    Argentina Challenging Moderate Challenging Moderate Moderate
    Brazil Soft Moderate Soft Soft Challenging
    Chile Moderate Soft Moderate Soft Moderate
    Colombia Soft Soft Soft Soft Moderate
    Mexico Challenging Challenging Moderate Soft Challenging
  • North America
    • Overall, buyer friendly market conditions continue and are accelerating in key areas as insurers focus on end-of-year growth targets.
    • The Casualty environment is bifurcated, with moderate conditions for General Liability and Workers Compensation and more challenging conditions in Auto. Umbrella/Excess Liability is challenging in the U.S. but favorable in Canada.
    • Property rates continue to moderate, with healthy levels of competition for well-managed risks with good loss ratios. While losses from Hurricane Helene are not expected to have significant market impacts, at the time of this writing, very preliminary assessments of potential impacts of Hurricane Milton estimate losses in the $25-$40 billion range. At that level, the event should be manageable for the insurance and reinsurance industry as a whole; however, it seems unlikely that the reinsurance rate reductions that were expected for the January 1 Treaty Renewal season will materialize.
    Q3 North America Market Dynamics
      Overall Pricing Capacity Underwriting Limits Deductibles Coverages
    North America Moderate Flat Ample Prudent Flat Flat Stable
    Canada Moderate -1-10% Ample Prudent Flat Flat Stable
    United States Moderate Flat Ample Prudent Flat Flat Stable
    Q3 North America Product Trends
      Automobile Casualty/Liability Cyber Directors & Officers Property
    North America Challenging Moderate Soft Soft Moderate
    Canada Moderate Moderate Soft Soft Moderate
    United States Challenging Moderate Soft Soft Moderate
  • Pacific
    • Following several years of focusing on a return to profitability, market conditions are improving across all product lines, with increasing levels of capacity and competition from new and established markets.
    • The Property market is beginning to moderate, although natural catastrophe exposures remain challenging in Australia and New Zealand.
    • Pricing in the Cyber market continues to soften, despite ransomware events and the recent CrowdStrike outage, although underwriting remains disciplined.
    Q3 Pacific Market Dynamics
      Overall Pricing Capacity Underwriting Limits Deductibles Coverages
    Pacific Moderate -1-10% Ample Prudent Flat Flat Stable
    Australia Moderate -1-10% Ample Prudent Flat Flat Stable
    New Zealand Moderate Flat Ample Prudent Flat Flat Stable
    Q3 Pacific Product Trends
      Automobile Casualty/Liability Cyber Directors & Officers Property
    Pacific Moderate Moderate Soft Soft Moderate
    Australia Moderate Moderate Soft Soft Moderate
    New Zealand Moderate Moderate Soft Moderate Moderate

To see our full analysis of regional and country level insurance market conditions, download the report here.

General Disclaimer

The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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