Q3 Regional Insights
Asia-Pacific
- While we continued to see a stabilization of pricing in many areas, insurers continued to see mixed results. While some insurers experienced growth, losses tended to keep pace, leading to sustained rate increases in some products. Claims inflation continued to dominate insurer discussions.
- In the Property space, underwriters evaluated the impacts on claims costs of competing market forces (downward pressure from an oversupply of some materials coupled with upward pressure from ongoing supply chain challenges associated with high energy materials). In addition, valuations remained under scrutiny.
- For Casualty, persistent inflationary pressure impacted insurer profitability as claims developments continued to climb above initial reserves.
- Insurers remained selective as they continued to push for a flight to quality.
- Reinsurers - wary after several years of above average catastrophe claims - reduced their appetite for catastrophe exposure at the June/July renewals. Some insurers were expected to retain more risk to manage the gap, potentially resulting in pricing and capacity implications in some areas.
EMEA and the United Kingdom
- Moderate market conditions continued, characterized by modest price increases, generally sufficient capacity and underwriting prudency – with a higher level of cautiousness and conservatism around Cyber, US exposures and Product Recall.
- As the quarter progressed, attention turned toward January 1, 2023, treaty renewals and their potential impacts, including on capacity for Natural Catastrophe and Political Violence.
- Inflation remained a key area of underwriting focus, with continued scrutiny on values and supply chain impacts.
- The impact of the geopolitical events in Eastern Europe continued to unfold with insurers slowly increasing reserves quarter-by-quarter
- Underwriting proposals increasingly referenced ESG strategies as insurers looked to partner with insureds to help them improve their ESG posture.
Latin America
- Challenging market conditions continued, with some signs of stabilization across both pricing (in areas targeted for growth) and coverage terms, although underwriting conservatism remained strong, especially for poor performing risks and challenging risk types.
- Insurer focus on Environmental, Social and Governance (ESG) continued to increase, which had a pronounced impact on underwriting strategies and behaviors.
- The Property market remained challenging in some countries, characterized by price increases, contraction of capacity and a challenging underwriting environment, while D&O saw a general improvement in capacity and pricing.
North America
- Moderate market conditions continued despite ongoing economic volatility, geopolitical uncertainty, supply chain challenges and climate change concerns. Underwriters remained disciplined and focused on risk quality. Superior renewal outcomes could be achieved for risks with favorable loss experience and strong risk management.
- In the aftermath of Hurricane Ian, which, by early industry estimates, may amount to a $50-70B insurance event, insurer conservatism strengthened. Additional market impacts are expected to ripple across the primary and reinsurance markets in Q4 and beyond.
- The Cyber landscape experienced a further deceleration of price increases but remained moderately challenged. Systemic, correlated risks and aggregate impacts continued to be a key concern for insurers.
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