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2023 has been shaped so far by geopolitical turbulence and climate-related events, but also economic resilience in the face of persistent inflation. Humanitarian concerns are at the forefront of global priorities for society at large, but lingering concerns about financial solvency following failures in the banking sector continue for many business leaders. In 2024, these trends will continue, according to Beinsure's report Global Insurance Market Dynamics.
The Key Insurance Market Trends
Cyber & ransomware threats, the shifting labor market, and technological advances such as Artificial Intelligence in insurance are weighing on the minds of people from every corner of the world, including business leaders who are guiding their firms in these changing times, according to Aon.
A complex macro environment shaped insurer confidence and strategies. Economic resilience, gradual improvements in global supply chains, and a global construction boom served to bolster insurer confidence, while geopolitical instability, persistent social and economic inflation, and climate-related concerns created uncertainty and conservatism.
Insurance market continued to moderate as insurers sought to balance growth with profitability, divergent conditions continued for favored versus challenged risks.
- Favored and well-performing risk types experienced an expansion of underwriting appetite, an increase in available capacity from new and established insurers, and healthy competition, driven largely by insurers’ return to profitability, an interest rate driven boost in insurer performance, and confidence that coverage language had been (re)aligned with insurer intent.
- Higher-risk, natural catastrophe-exposed, and claims-impacted risks, as well as those not demonstrating mature risk management practices, experienced the most significant price increases and capacity constraints, driven largely by natural catastrophe-driven volatility, a challenging early-2023 reinsurance market environment, and rising legal settlement amounts.
- Across all risk types, the underwriting environment was disciplined and focused on risk differentiation. Superior results were achieved through early engagement with insurers and robust, differentiating submission details including valuation methodologies, risk control practices, improvements implemented, and lessons learned from past claims.
Insurance Market Dynamics
Insurance Pricing
Adverse claims trends pressured pricing upward across Auto and Casualty, while Cyber and Directors and Officers experienced a softening market as incumbent insurers sought to retain and grow their portfolios. Property pricing remained volatile due to concerns related to inflation, high reinsurance costs, climate change and Natural Catastrophe exposures.
Capacity was sufficient across most products and risk types as established insurers expanded their appetite, and other insurers (re)entered markets targeted for growth. Capacity for Natural Catastrophe-exposed Property risks remained constrained driving continued use of alternative solutions including index-based products, self-insurance and captives.
Insurance Underwriting
As insurers focused on profitable growth, underwriting stringency gave way to flexibility, but discipline continued. Underwriters focused on individual risk profile, controls and performance. Risk quality and differentiation remained a top priority. Use of data and analytics to support decision-making continued to gain prevalence. Superior results were achieved through early engagement with insurers and robust submission details, including descriptions of valuation methodologies, risk control practices, improvements implemented, and lessons learned from past claims.
Insurance Limits
Most placements renewed with expiring limits and sub-limits; however, Property limits were pressured upward by economic inflation, which, together with social inflation and “nuclear verdicts”, also impacted Auto and Casualty limits. Larger limits were available on Cyber and Directors and Officers placements as clients sought to restore limits reduced in recent years.
Insurance Coverages
Coverage enhancements, supported by quality underwriting data, were available in areas targeted for growth as insurers continued to leverage coverage terms as a differentiator. Some exclusions remained non-negotiable.