A View from the Top

Rory Moloney Chief Operating Officer, Enterprise Client Group

The business climate has never been more complex and interconnected. Business models are being reshaped, while organizations across the globe are responding to and, at the same time, recovering from the once-in-a-lifetime set of challenges posed by the COVID-19 pandemic. Financial losses from large-scale natural disasters and man-made events continue to loom and adversely impact livelihoods and businesses. Business and operating models are rapidly changing, creating a host of new risks – from cyber to supply chain. In 2021, these business challenges exist against a backdrop of daunting macro issues such as struggling economies, political unrest, talent and worker shortages, mounting climate change concerns, and ESG pressure, to name a few.

Aon’s 2021 Global Risk Management Survey – featured in this edition of the Global Market Insights report - gathers input from thousands of risk managers across 60 countries/territories and 16 industries to identify key risks and challenges their organizations are facing, enabling better decision-making around risk in an increasingly volatile and complex business environment. As an organization, we are dedicated to providing innovative solutions to help organizations address these risks - both traditional and emerging. Leveraging our global expertise and cutting-edge data and analytics, our purpose is to enable our clients to make better decisions and manage volatility at scale. Historically, we have learned and made decisions by analyzing data from loss events as they have occurred. With the current absence of historical data, the challenge will be to forward-think how to best develop solutions to properly prepare for and manage through them.

In this quarter’s Global Market Insights report, we highlight the continuation of an important trend that began in Q2 of this year - the deceleration of rate increases, driven by myriad converging factors:

• Losses from the COVID-19 pandemic have not yet materialized to levels initially feared by (re)insurers;
• Insurer remediation efforts over past renewal cycles have improved pricing adequacy and portfolio performance, and shifted the focus toward growth; and
• Current pricing levels, coupled with improved portfolio performance, have increased appetite and attracted new capital from traditional and non-traditional sources.

At the same time, there is a continued evolution of underwriting practices in the industry as a growing number of insurers transition to centralized underwriting for many risks, and the process becomes more rigorous and data-driven than ever. Cyber, and especially, Ransomware, has surpassed Directors & Officers and Natural Catastrophe risk to become the most strained class of business, and related insurance market challenges are called out by nearly every country featured in this quarter’s report. On behalf of Aon, we welcome you to explore our thought leadership related to these, and many other, market trends, and we look forward to partnering with you to develop and implement solutions to meet the evolving needs of your firm.