Buyer friendly conditions continue as insurers focus on growth: Aon

Buyer friendly conditions for insurance buyers in North America continued through the third quarter of 2024, accelerating in key areas as insurers seek to achieve year-end growth, Aon has revealed in its recent North America Market Overview for Q3.

In its remarks, the broker noted that the Casualty insurance environment presents a mixed picture. General Liability and Workers Compensation are experiencing moderate conditions, while Auto insurance faces more challenging circumstances.

In the case of Umbrella/Excess Liability the U.S. market is proving difficult, but conditions are more favourable in Canada.

Property rates continue to moderate, with good competition for well managed risk with good loss ratios.

Hurricane Helene is not expected to have a significant impact on the market, Aon noted at the time the report was written. However, early estimates for Hurricane Milton’s losses are around $25-$40 billion.

While the insurance industry should be able to handle this, the broker stated, it might mean that the expected decreases in reinsurance rates for January 1 Treaty Renewal season will not happen.

Additionally, Aon’s report noted that insurer growth ambitions are pressuring pricing downward while a focus on profitability and longer-term results has served to temper aggressive decreases.

This has resulted in property insurance seeing moderate pricing with adjustments based on risk profiles, offering reductions for desirable risks and slight increases for others.

Conversely, automobile and U.S. umbrella/excess liability insurance are facing rate increases, sometimes significant, in response to unfavourable loss trends.

While cyber and directors & officers insurance experience moderate to significant rate reductions, although the latter is decelerating.

According to Aon’s report, the insurance market currently enjoys ample capacity to meet demand across most lines of business, as established insurers increase their appetites and limits, alongside the entry of new market players.

Well-performing shared and layered property programs tend to be oversubscribed, although high-hazard property risks and excess liability placements still encounter some capacity constraints. However, Cyber and Directors & Officers show abundant capacity.

Underwriting remains disciplined, Aon analysts have also observed, as insurers pursue profitable growth.

However, with increasing competition, underwriters are showing more flexibility for Property, Cyber and Directors & Officers. Robust submissions continue to result in more favourable terms.

Favourable market conditions are allowing some businesses to increase their cyber insurance coverage limits and reduce the number of participants on their property policies upon renewal.

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.

Finally, while insurance coverage has remained stable across most classes of business, insurers are becoming more accommodating in areas with increased competition.

This rise in competition is also helping to address the inconsistencies of non-concurrency of terms that arose during the hard Property market. PFAS exclusions are being widely applied in Casualty.

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