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Report
2024 was a year of insurance market transition following a prolonged period of widespread price increases and underwriting discipline spanning wide swathes of the market, the past year saw a pronounced shift toward buyer-friendly conditions, with insurers growing steadily more confident and focused on targeted growth.
Despite another active year for natural catastrophe losses, conditions in the Property market continued to ease in the final quarter of 2024, with increasing capacity and underwriting flexibility for well-performing, preferred risk types. The softening of the Cyber insurance market, already well underway at the start of 2024, accelerated during the year. The well-capitalized Directors & Officers market saw buyer-friendly conditions prevail, although price reductions have decelerated and, in some cases, leveled off in recent quarters as some insurers began to focus on sustained underwriting profitability.
Fueled by higher treaty attachments that kept most natural catastrophe losses from impacting reinsurers, abundant capacity, and competition, reinsurance market renewals for the January 1, 2025, season were broadly favorable. This, combined with insurer growth ambitions, furthers our optimism that moderate-to-favorable conditions will continue in 2025 across most categories of the market. While the outlook is broadly positive, it is worth noting a trend that we think is here to stay – the insurance market no longer moves only in broad cycles, but rather moves increasingly in micro cycles that are more product, industry and geography-specific. These micro markets are at different stages of their respective cycles. Buyers in Japan, for example, face challenging conditions at the start of 2025 as insurers continue to take measures to improve underwriting profitability, while the compounding effect of rate reductions and an evolving risk landscape for Cyber and Directors and Officers points to potential volatility for these two lines in the years ahead. Indeed, today’s easing market conditions can swiftly change a micro market as loss data and other external factors are more quickly available and absorbed into the underwriting ecosphere. As we begin 2025, we are carefully watching for further developments related to natural catastrophe exposed Property risks – particularly in the immediate aftermath of the California wildfires which are estimated, at the time of writing, to have damaged or destroyed more than 12,000 residential and commercial structures – as well as in the U.S. Casualty market, including:
With the cost of Natural Catastrophe insured losses in 2024 exceeding $100 billion for the fifth consecutive year, extreme weather events remain a major challenge for the insurance industry, insureds and governments, who are increasingly footing the bill for such events. While losses from hurricanes Helene and Milton appear to be within industry tolerances, these events, together with the early January California wildfires, further underscore the unpredictability and volatility of climate-related losses, which may affect insurer growth appetite in 2025. The potential for this shift became more pronounced in the final quarter of 2024 as some loss-affected markets showed conservatism on capacity, pricing, and coverage for Natural Catastrophe risks.
While parts of the Casualty market are beginning to soften, “nuclear verdicts”, litigation funding and aggressive plaintiff bar tactics continue to drive adverse loss trends for risks with U.S. exposure. With no remedy to social inflation in sight, difficult market conditions for U.S. Casualty – especially in the excess layers – look almost certain to continue into 2025. Casualty insurers are getting more stringent regarding coverage for “forever chemicals” (per-and polyfluoroalkyl substances), while evolving privacy regulations and artificial intelligence are also risk areas on insurers’ radars.
In addition to climate unpredictability and adverse litigation trends, insureds and insurers alike must contend with geopolitical and economic headwinds, ever-evolving cyber threats, the impact of artificial intelligence, and growing corporate responsibility risks. While insurers face an increasingly competitive market, we think these many uncertainties, declining interest rates and continued loss volatility will prevent the complete abandonment of the underwriting discipline that began about 7-8 years ago. We expect continuing focus on long term pricing adequacy as insurers make pricing decisions in 2025.
At the same time, risk managers have entered an unprecedented period of choice which will continue to expand with the continuing sophistication of analytics driving more quantitative decision-making, and the increasing interest of new sources of capital in the risk space. Alternative risk solutions including captives, parametric products, and facilities have continued to gain prevalence in the risk manager’s toolkit. And traditional insurance solutions are evolving as well as organizations seek more customized solutions and re-evaluate risk retention and risk transfer tradeoffs. Today’s dynamic environment offers opportunities for clients to deepen their key relationships with insurers while securing risk transfer and alternative solutions that better meet their needs. As most can expect easing market conditions, now is the time to consider strategic investments in long-term risk management and risk financing strategies using data and insights to shape and sharpen your decision-making.
Report
Expand the options below to read a summary of how the insurance market trended in Q4 2024 across pricing, capacity, underwriting, limits, deductibles and coverages.
Pricing | Capacity | Underwriting | Limits | Deductibles | Coverages | |
---|---|---|---|---|---|---|
Asia | -1-10% | Ample | Prudent | Flat | Flat | Stable |
EMEA | Flat | Abundant | Prudent | Flat | Flat | Stable |
Latin America | -1-10% | Ample | Flexible | Flat | Flat | Stable |
North America | Flat | Ample | Prudent | Flat | Flat | Stable |
Pacific | -1-10% | Abundant | Prudent | Flat | Flat | Stable |
Overall, pricing continues to moderate, with more favorable conditions across an increasingly wider range of risks and geographies. Cyber and Directors & Officers placements continue to experience the most significant price reductions worldwide, although some Directors & Officers insurers have, in seeking longer-term price adequacy, continued to evaluate the wisdom of continued price decreases. Preferred and low-hazard Property risks are seeing increasing pricing competition and reductions in most parts of the world. While the environment is favorable for many risks, less buyer-friendly pricing is impacting some markets such as Automobile and U.S.-exposed Casualty, as well as Natural Catastrophe exposed Property risks, particularly in markets impacted by large losses in 2024. Conditions also remain more challenging in Japan, where domestic insurers remain firmly focused on restoring underwriting profitability.
As insurers have gradually re-entered markets and increased their capital deployment in others, most lines of business are now well-capitalized, including Cyber, Directors & Officers, preferred Property and Casualty. Exceptions continue, however, across domestic Japanese insurers, as well as Automobile, complex and U.S. Casualty, and Natural Catastrophe exposed Property risks in loss-affected markets, where capacity is more constrained. Capacity has tightened in countries where reinsurance capacity has contracted, notably, in parts of Latin America.
Underwriting remains disciplined, although insurers are generally more flexible when competing for preferred risks, and some have shown more willingness to consider risks they would have previously declined. Underwriting is more rigorous for highly exposed Natural Catastrophe risks as well as for U.S. Casualty and Automobile. Cyber and Directors & Officers underwriting remains rigorous despite intense competition. With more favorable conditions, long term agreements are more widely available in Property.
Limits are renewing as expiring for most placements; however, there are opportunities to use premium savings to restore limits to previous levels or to update based on inflation-driven and other exposure increases, especially for Cyber, but also for Property and Casualty. Restrictions persist in some products and risk types such as Product Recall and U.S.-exposed Casualty.
Deductibles are broadly stable, albeit with increases in deductible levels for Automobile and catastrophe exposures in some loss-affected markets. In Japan and certain Latin American countries, insureds are considering higher deductibles to manage higher premium costs. Reductions in deductibles are available where competition is strong, especially in Cyber and Directors & Officers.
Coverages are mostly stable, although Casualty insurers are mandating PFAS exclusions (i.e. “forever” chemicals) in many markets. For competitive lines of business, namely Cyber and Directors & Officers, there may be opportunities to broaden coverage, and align terms across shared/layered Property programs to correct non-concurrency of terms arising during the hard market. Property insurers may seek coverage restrictions for flood exposure in markets recently impacted by losses, such as Brazil and Thailand.
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Expand the options below to read a summary of how the insurance market trended in Q4 2024 across key lines of business, including Automobile, Casualty/Liability, Cyber, Directors & Officers and Property.
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
Asia | Moderate | Soft | Soft | Soft | Soft |
EMEA | Moderate | Moderate | Soft | Soft | Moderate |
Latin America | Moderate | Moderate | Moderate | Soft | Moderate |
North America | Challenging | Moderate | Soft | Soft | Moderate |
Pacific | Moderate | Moderate | Soft | Soft | Soft |
Despite an easing of supply chain disruptions, higher claims costs continue to drive increases in Automobile pricing in many markets, including the U.S. Capacity is constrained in some geographies as insurers restrict their appetite and re-evaluate their participation in this line of business. Limits are generally unchanged, although higher deductibles are commonplace to reflect claims inflation, particularly in EMEA. Electric vehicles, newer technologies, and car-sharing are key underwriting considerations.
The Casualty market is diverging, split between risks exposed to the U.S. tort system and the rest of the world. Casualty markets outside the U.S. are becoming more favorable, with some, such as Canada, softening. While modest reductions are still available for U.S. Workers Compensation, social inflation and adverse loss trends continue to drive rate increases for U.S. Casualty, in particular, Excess Liability. PFAS remains an area of focus for underwriters and is subject to broad exclusions, although these are negotiable in some markets when supported by good data. In Mexico, insureds are considering adjusting limits following higher compensation awards for moral damages.
Ample capacity and aggressive competition continue to drive a buyers’ market for Cyber, despite an increase in ransomware activity in 2024. In most markets, moderate rate reductions, broader coverage, and increased limits are available for risks with appropriate cyber security controls. Favorable conditions are expected to continue in 2025, supporting growth in emerging Cyber markets; however, the juxtaposition of loss trends and a softening market could give rise to future market volatility. Risk differentiation remains key to favorable renewal outcomes over the long term. Aon offers a framework to help insureds improve and demonstrate cyber risk controls to insurers.
Abundant capacity continues to support a buyers’ market for Directors & Officers, although price reductions are moderating. Favorable conditions are expected to continue in 2025, but insurers can be expected to evaluate price adequacy. Terms and conditions remain prudent, yet flexible, while some insurers are cautious of risks with significant U.S. exposure, as well as non-traditional risks, such as crypto firms. Artificial intelligence is a topic of growing underwriting interest for insurers.
Ample capacity and insurer growth strategies continue to create more favorable conditions in the Property market, with moderate pricing and/or rate reductions available for most preferred risks. However, underwriting remains prudent, particularly for loss-affected risks and risks with a significant exposure to Natural Catastrophes. Following some large and costly storm and flood events in Europe, Asia and the Americas in 2024, some Natural Catastrophe exposed Property risks experienced localized capacity constraints and coverage restrictions.
Expand the options below to read a summary of global claims trends from Q4 2024. For more detailed analysis, download and read the full report here.
The overarching topic of inflation continues to permeate claim values in all lines of business. World events, including the aftermath of COVID and Russia’s invasion of Ukraine, combined with overall geopolitical uncertainty, continues to impact supply chains and drive-up energy prices. These events and developments are continuing to have a knock-on effect: rising claims costs.
Plaintiff attorneys continue to achieve “nuclear verdicts” in U.S. courts, with the American Tort Reform Foundation naming 10 jurisdictions as being the worst places for defendants to litigate in its 2024-2025 Judicial Hellholes report. Exacerbating this situation are litigation funders who see this as an opportunity to get significant returns on their investment and actively grow their presence in U.S. Although most in the insurance market continue to call for greater regulatory scrutiny and transparency on litigation funded lawsuits, reaction from courts and regulators is slow. Greater regulation and transparency is important so that juries are aware of the commercial dynamics of any award they give – in its June 2024 report, the U.S. Chamber of Commerce, Institute for Legal Reform highlights 20-40% of final awards go to the litigation finance company. Additionally, plaintiff attorneys may take a cut, leaving the plaintiff with a substantially lower amount than a jury may have believed they awarded.
Previously, social inflation was experienced mostly by the auto and trucking sectors, but we have seen a concerning trend of this broadening into different industry sectors facing personal injury liability claims, including aviation and energy.
This rise in so called “nuclear verdicts” has driven up pricing for U.S. exposed risks. At Aon, we have taken an active stance on this issue to support our clients and no longer place litigation cover for companies engaged in U.S. litigation financing.
We are also keeping a close eye on Europe where class actions are now allowed under the European class action regime. Litigation funders are keen to capitalize on this development and have grown their footprint across UK and Continental Europe.
Expand the options below to read a summary of regional insurance market trends in Q4 2024.
For more detailed analysis, download and read the full report here.
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 | -11-20% | Abundant | Flexible | Flat | Flat | Stable |
Japan | Challenging | +1-10% | Constrained | Rigorous | Decreased | Flat | Stable |
Singapore | Soft | -1-10% | Abundant | Prudent | Flat | Flat | Stable |
Thailand | Moderate | -1-10% | Ample | Prudent | Flat | Flat | Stable |
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
Asia | Moderate | Soft | Soft | Soft | Soft |
China | Moderate | Soft | Moderate | Soft | Soft |
Hong Kong | Moderate | Soft | Soft | Soft | Soft |
Japan | Moderate | Challenging | Challenging | Moderate | Challenging |
Singapore | Moderate | Moderate | Soft | Soft | Moderate |
Thailand | Moderate | Moderate | Soft | Soft | Moderate |
Overall | Pricing | Capacity | Underwriting | Limits | Deductibles | Coverages | |
---|---|---|---|---|---|---|---|
EMEA | Moderate | Flat | Abundant | Prudent | Flat | Flat | Stable |
D-A-CH | Moderate | Flat | Abundant | Prudent | Flat | Flat | Stable |
France | Moderate | Flat | Abundant | Flexible | Flat | Flat | Stable |
Iberia | Soft | -1-10% | Abundant | Prudent | Increased | Flat | Stable |
Italy | Moderate | +1-10% | Ample | Rigorous | Flat | Flat | Stable |
Middle East | Moderate | -1-10% | Ample | Prudent | Flat | Flat | Stable |
Netherlands | Moderate | Flat | Abundant | Flexible | Increased | Flat | Stable |
Nordics | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
South Africa | Moderate | Flat | Ample | Prudent | Flat | Increased | Stable |
Turkey | Moderate | -1-10% | Ample | Prudent | Flat | Flat | Stable |
United Kingdom | Soft | -1-10% | Abundant | Flexible | Increased | Flat | Stable |
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
EMEA | Moderate | Moderate | Soft | Soft | Moderate |
D-A-CH | Challenging | Moderate | Soft | Soft | Moderate |
France | Challenging | Moderate | Soft | Soft | Moderate |
Iberia | Challenging | Soft | Soft | Soft | Moderate |
Italy | Challenging | Soft | Moderate | Soft | Moderate |
Middle East | Moderate | Moderate | Soft | Soft | Moderate |
Netherlands | Moderate | Moderate | Soft | Moderate | Moderate |
Nordics | Not Applicable | Moderate | Soft | Soft | Moderate |
South Africa | Moderate | Moderate | Moderate | Moderate | Challenging |
Turkey | Soft | Moderate | Soft | Soft | Moderate |
United Kingdom | Moderate | Soft | Soft | Soft | Soft |
Overall | Pricing | Capacity | Underwriting | Limits | Deductibles | Coverages | |
---|---|---|---|---|---|---|---|
Latin America | Moderate | -1-10% | Ample | Flexible | Flat | Flat | Stable |
Argentina | Moderate | -1-10% | Ample | Flexible | Flat | Flat | Stable |
Brazil | Soft | -1-10% | Abundant | Flexible | Increased | Flat | Broader |
Chile | Moderate | -1-10% | Ample | Prudent | Flat | Flat | Stable |
Colombia | Moderate | +1-10% | Ample | Prudent | Flat | Flat | Stable |
Mexico | Moderate | Flat | Constrained | Prudent | Flat | Flat | Stable |
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
Latin America | Moderate | Moderate | Moderate | Soft | Moderate |
Argentina | Challenging | Moderate | Moderate | Soft | Moderate |
Brazil | Soft | Soft | Soft | Soft | Moderate |
Chile | Soft | Soft | Moderate | Soft | Moderate |
Colombia | Moderate | Moderate | Moderate | Soft | Moderate |
Mexico | Moderate | Moderate | Moderate | Soft | Challenging |
Overall | Pricing | Capacity | Underwriting | Limits | Deductibles | Coverages | |
---|---|---|---|---|---|---|---|
North America | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
Canada | Soft | -1-10% | Abundant | Prudent | Flat | Flat | Stable |
United States | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
North America | Challenging | Moderate | Soft | Soft | Moderate |
Canada | Moderate | Soft | Soft | Soft | Moderate |
United States | Challenging | Moderate | Soft | Soft | Moderate |
Overall | Pricing | Capacity | Underwriting | Limits | Deductibles | Coverages | |
---|---|---|---|---|---|---|---|
Pacific | Soft | -1-10% | Abundant | Prudent | Flat | Flat | Stable |
Australia | Soft | -1-10% | Abundant | Prudent | Flat | Flat | Stable |
New Zealand | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
Pacific | Moderate | Moderate | Soft | Soft | Soft |
Australia | Moderate | Moderate | Soft | Soft | Soft |
New Zealand | Moderate | Moderate | Soft | Moderate | Moderate |
To see our full analysis of regional and country level insurance market conditions, download the report here.
Report
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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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