TOP 5 THEMES

04

Climate change and ESG

Climate change

The impact of climate change is making pricing natural catastrophe risk more difficult, with forward-looking modelling now run alongside historical data by (re)insurers. A record number of hurricanes in the US and growing wildfire losses being real examples, if needed, of the change. Aon Re’s reports on the subject offer deeper analysis, available on our website; loss data is contained in Appendix II of this report.

ESG

We observed new levels of ESG oversight from carriers everywhere. The major European carriers had been most active, and were joined by Lloyd’s and most global carriers in increasing scrutiny of ESG practices in high-risk industries. Lloyd’s issued its ESG report in December 2020, detailing, amongst other things, its expectations of the market from an investment and underwriting perspective. The German (re)insurance markets set the highest standards, where blanket withdrawal of capacity due to ESG issues was a more common position, sometimes changed after a long discovery process. Helping clients navigate this changing market is an area of investment at Aon and other brokers. It has a read across to the talent challenges section of this report because good professionals in this area are in high demand. Converting academic insights into commercial services (be they advisory or transactional) is a work in progress and a future competitive area for brokers and management consultants. At Aon, this is a significant target area of investment, especially post-merger with Willis Towers Watson.

"We observed new levels of ESG oversight from carriers everywhere."

05 Technology and data & analytics