Capacity tamed the prices: Aon sees more balanced markets globally
Insurer capacity has tamed a greater and greater swathe of the global pricing picture, pushing Aon's Q1 global insurance market dashboard increasingly to neutral readings across more product lines and geographies.
“After a prolonged period of adjustments to their appetite, capacity strategies, pricing models and coverage terms, many insurers returned to profitable positions in 2023, leading to healthy appetite, more underwriting flexibility, the availability of coverage options, and abundant capacity across much of the market, especially for preferred risk types,” Joe Peiser, Aon's CEO for Commercial Risk Solutions, wrote in his quarterly summary.
The upshot: a considerably more balanced market, with few lingering hot spots on the Aon pricing dashboard and capacity balancing out in turn, Aon's quarterly "Global Insurance Market Insights Report" indicates.
"Modest increases or flat pricing became increasingly common with some reductions available, particularly for Cyber and Directors and Officers placements," authors wrote of the bottom line at pricing time. "Where significant increases had been mandated during recent renewals, underwriters showed greater flexibility on current quarter pricing."
Aon's global insurance market dashboard has gone monochrome neutral, with previously achieved stability in coverage terms, T&C and underwriting now generating balanced capacity and largely even pricing across Aon's four major studied geographies.
North America and the Asia Pacific region shifted into flat pricing on the Q1 dashboard from single-digit gains in Q4 with only Latin America left hardening in Q1.
And capacity evolved in turn. Prior "abundant" capacity shifted to greater market balance in Q4 for North America and Q1 for APAC and Latin America. EMEA has had a full set of Aon neutral readings throughout.
That surface calm is hiding a lot of change going on behind the scenes. Risk differentiation and selection are growing as topics and a rematching of risks to programs "may mean that some risks will transition to new structures or providers," authors wrote.
Break it down by product line and geography and greater nuance comes out. D&O is soft across every major region globally and cyber is soft through EMEA, LatAm and APAC. Automotive remains “challenging” in EMEA, a condition that has spread to LatAm, the Aon dashboard shows.
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