Q3 Regional Overview

North America

Market conditions continue to stabilize as combined ratios shift, capacity continues to flow in from traditional and non-traditional sources, and pandemic-related underwriting uncertainty subsides. A refocus from remediation toward growth continues.

ESG focus is having a growing impact. Insurers are experiencing notable pressure from lobbyists around the globe to resign from some risk types which are under threat of investment withdrawal.

Traditional broking has become more innovative and symbiotic. Experts are collaborating across risk, consulting, actuarial, reinsurance, health, retirement, investments, etc. to support risk assessment and quantification, risk financing decisioning, captive feasibility evaluation, exploration of alternative capital, and other out-of-the-box options and solutions.

The industry is experiencing a war for talent. Talent shortages and resource pressures that existed pre-COVID have only been exacerbated by a pandemic-driven shift in workforce behaviors and mindsets.

EMEA and the United Kingdom

The market is less stressed and there is more competition. For risk types and lines of business deemed profitable, insurers have shifted their focus from remediation toward retention and cautious growth.

New pricing levels have attracted additional capacity for the right risks; however, poor performing industries and lines of business remain constrained.

Underwriters are applying coverage limitations more aggressively, especially for poor performing risk types and/or risks without robust underwriting information. Ransomware, Silent Cyber, and Contingent Business Interruption are common.

To avoid price reductions, underwriters are instead offering other value-added alternatives such as changes to limits and deductibles.

Latin America

Market conditions have generally stabilized, but still vary widely based on line of business, location, and risk profile. Organizations with favorable risk quality, robust exposure detail and strong risk management practices are generally experiencing favorable conditions while poor performing risks are experiencing few options and a reduction in capacity.

The market is supporting the many organizations that continue to leverage cost savings strategies such as program structure changes, captives, and treaty capacity.

Insurers are urgently focused on underwriting performance. Underwriting practices have become more stringent and onerous. Local authority is notably diminished. Central teams are requiring extensive risk detail, and the process is taking longer.

Claims delays and negative responses remain a key concern. Longer analysis times and narrow interpretations of policy language are leading to lengthy debates and challenging discussions with insurers, and therefore recognition of claims coverage is taking longer. Loss adjusters have become more active in the definition of claims, including coverage definition.

Asia Pacific

Following a prolonged period of remediation efforts, market conditions are improving – but in pockets. Rate movement in some areas continues to ease and particularly for the more vanilla occupancies and exposures, well-managed risks, and risks with low Nat Cat footprint. Other areas such as Cyber, Professional, and risks requiring large limit capacity remain challenged.

Data Loss Language is improving. In response to the widespread adoption by underwriters of “Silent Cyber Endorsements” (exclusions) – which were deemed by the industry at large as overly broad, and which had negative consequences for many insureds - Aon has been at the forefront of working with local and global underwriters to redraft Data Loss language. This is an important area, and Aon continues to gain momentum in providing clients with much needed clarity.

Insurer focus on reducing volatility may be having the opposite effect. Insurers with such focus generally have smaller premium pools to withstand the growth of loss potential that is occurring with globalization and just-in-time manufacturing. Many insurers which have chosen to maintain a broader appetite while carefully managing line size have fared better.

Exclusions from treaty renewals are flowing into the retail contracts. While these exclusions (e.g., Cyber, Communicable Disease) are not new, treaty insurers have become more specific and restrictive in their wordings.