The global insurance market underwent significant changes in 2024, with insurers adjusting their strategies to prioritize sustainable growth, according to Aon’s Q4 2024 Global Insurance Market Insights report.
While favorable conditions for buyers persisted across multiple lines, certain risks, especially those related to US casualty insurance and natural catastrophes, continued to present challenges.
Property, Cyber, and D&O Markets Reflect Softening Trends
The property insurance market saw an increase in capacity and greater flexibility for well-performing risks, following a trend of moderation throughout the year. However, insurers remained cautious when it came to properties in areas exposed to natural catastrophes, particularly in regions affected by significant losses.
Cyber insurance remained highly competitive, resulting in lower rates and broader coverage availability for businesses with strong cybersecurity protocols.
The Directors & Officers (D&O) market remained favorable for buyers, although price reductions slowed as insurers focused on long-term underwriting profitability.
Casualty Market Faces Ongoing Litigation Challenges
The casualty insurance market displayed mixed trends, with some segments softening and others staying under pressure. Risks with US exposure, particularly those related to legal issues such as nuclear verdicts, litigation funding, and an increasingly aggressive plaintiff bar, continued to face challenges.
Excess liability pricing rose, while insurers remained cautious about exposures related to per- and polyfluoroalkyl substances (PFAS), which have been increasingly excluded from many policies.
Reinsurance Market and Micro-Cycle Trends
Looking toward 2025, reinsurance renewals indicated generally stable capacity, supported by higher treaty attachment points that limited reinsurers’ exposure to primary market losses.
Aon’s analysis suggests a shift in the insurance market away from broad cyclical changes, with a move toward more segmented markets based on product, industry, and geography. While conditions improved in many global markets, Japan faced continued rate pressure as domestic insurers worked to restore underwriting profitability. At the same time, the cyber and D&O markets, despite recent improvements, could face volatility due to evolving risks.
Key Industry Considerations for 2025
Several macroeconomic and environmental factors are likely to influence the insurance market in the year ahead:
- Climate-related Losses: Insured natural catastrophe losses surpassed $100 billion for the fifth consecutive year in 2024. Although hurricanes Helene and Milton fell within industry expectations, significant wildfire damage in California and other climate-related events could affect insurers’ risk appetite in 2025.
- Litigation and Social Inflation: US casualty insurers continue to experience rising claims costs, particularly due to litigation trends in excess liability and complex casualty exposures.
- Emerging Risks: Regulatory changes, artificial intelligence, cyber threats, and geopolitical instability remain key areas of focus for insurers and risk managers.
Market Conditions by Key Metrics
- Pricing: Overall, pricing trends remained moderate. Cyber and D&O markets saw notable reductions, while US casualty, automobile, and catastrophe-exposed property risks continued to face rate increases.
- Capacity: Increased capital deployment led to expanded capacity across most lines, although some constraints remained in the US casualty, automobile, and loss-affected property markets.
- Underwriting: Insurers showed increased flexibility for preferred risks, though underwriting scrutiny remained high for complex exposures, particularly in casualty and catastrophe-prone property markets.
- Deductibles and Limits: Deductibles remained stable overall, with increases noted in high-risk segments. Some insureds used premium savings to adjust limits where possible.
- Coverage Trends: While terms were stable in most areas, exclusions related to PFAS expanded in casualty policies. Coverage broadening was seen in cyber and D&O, as competition led to more favorable conditions.
2025 Market Outlook and Strategic Considerations
Aon’s report emphasized opportunities for businesses to refine risk management and financing strategies as insurers continue to adjust to evolving conditions.
Alternative risk transfer solutions, such as captives and parametric products, are becoming more prominent, offering companies additional options beyond traditional insurance.
Joe Peiser, CEO of Aon’s Commercial Risk Solutions, highlighted the growing segmentation of insurance cycles: “The insurance market no longer moves only in broad cycles, but increasingly in micro-cycles that are more specific to products, industries, and geographies.”
Cynthia Beveridge, Aon’s global chief broking officer for commercial risk, noted the ongoing shift toward more favorable market conditions. “2024 saw a marked shift in the insurance market. Most clients can now expect an easing of conditions, with pricing continuing to moderate across a wide range of risks and geographies,” she said.
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