Aon reports easing rates and shifting risks in global insurance market

The global insurance market saw a notable transition in 2024, as insurers adjusted their strategies to focus on sustainable growth, according to Aon’s Q4 2024 Global Insurance Market Insights report.

While buyer-friendly conditions persisted across multiple lines, certain risks – particularly those related to US casualty and natural catastrophes – continued to face challenges.

Property, cyber, and D&O markets reflect softening trends

The property insurance sector experienced an increase in capacity and greater flexibility for well-performing risks, continuing a trend of moderation seen throughout the year. However, natural catastrophe-exposed properties remained subject to caution from insurers, particularly in loss-affected regions.

Cyber insurance also saw sustained competition, driving down rates and leading to broader coverage availability for businesses with strong cybersecurity measures.

In the D&O market, while conditions remained favourable for buyers, price reductions slowed as insurers prioritised long-term underwriting profitability.

Casualty market faces persistent litigation challenges

The casualty insurance market exhibited mixed trends, with some segments softening while others remained under pressure. Risks with US exposure faced ongoing headwinds due to legal trends such as nuclear verdicts, litigation funding, and an increasingly aggressive plaintiff bar.

Excess liability pricing continued to rise, and insurers remained cautious about exposures related to per- and polyfluoroalkyl substances (PFAS), which have been subject to broad exclusions in many policies.

Reinsurance market and micro-cycle trends

Reinsurance renewals leading into 2025 indicated generally stable capacity, supported by higher treaty attachment points that limited reinsurers’ exposure to primary market losses.

Aon’s analysis suggested that the insurance market is moving away from broad cyclical shifts, instead becoming more segmented by product, industry, and geography.

For example, while conditions improved in many global markets, Japan saw ongoing rate pressure as domestic insurers worked to restore underwriting profitability. In contrast, cyber and D&O markets – despite recent improvements – face potential volatility due to evolving risk factors.

Key industry considerations for 2025

Several macroeconomic and environmental factors are expected to influence insurance market conditions in the coming year:

• Climate-related losses: Insured natural catastrophe losses exceeded US$100 billion for the fifth consecutive year in 2024. While hurricanes Helene and Milton remained within industry expectations, significant wildfire damage in California and other climate-related events could impact insurer risk appetite in 2025.
• Litigation and social inflation: US casualty insurers continue to face rising claims costs due to litigation trends, particularly in excess liability and complex casualty exposures.
• Emerging risks: Regulatory developments, artificial intelligence, cyber threats, and geopolitical instability remain areas of focus for insurers and risk managers.

Market conditions by key metrics

• Pricing: Overall, pricing trends were moderate, with cyber and D&O experiencing the most notable reductions. However, US casualty, automobile, and catastrophe-exposed property risks continued to face rate increases.
• Capacity: Increased capital deployment resulted in expanded capacity for most lines, although some constraints remain in US casualty, automobile, and loss-affected property markets.
• Underwriting: While insurers showed increased flexibility for preferred risks, underwriting scrutiny remained high for complex exposures, particularly in casualty and catastrophe-prone property risks.
• Deductibles and limits: Deductibles largely remained stable, although increases were noted in high-risk segments. Some insureds leveraged premium savings to restore or adjust limits where conditions allowed.
• Coverage trends: While terms remained stable in most areas, PFAS exclusions expanded in casualty policies. Some coverage broadening was observed in cyber and D&O, where competition drove more favourable conditions.

2025 market outlook and strategic considerations

Aon’s report highlighted opportunities for insureds to refine risk management and financing strategies as insurers continue adapting to shifting conditions.

Alternative risk transfer solutions, such as captives and parametric products, are becoming more prominent, offering businesses additional options beyond traditional insurance.

Joe Peiser, CEO of Aon’s Commercial Risk Solutions, noted the increasing segmentation of insurance cycles.

“The insurance market no longer moves only in broad cycles, but rather moves increasingly in micro cycles that are more product, industry, and geography-specific,” he said.

Cynthia Beveridge, Aon’s global chief broking officer for commercial risk, reinforced the shift toward improved 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.