The new Aon Global Insurance Market Insights released recently has revealed the key opportunities and challenges facing the EMEA insurance market.
The report found that: “After a prolonged period of adjustments to their appetite, capacity strategies, pricing models, and coverage terms, many insurers returned to profitable positions in 2023. This in turn led to healthy appetite, more underwriting flexibility, the availability of coverage options, and abundant capacity across much of the market, especially for preferred risk types.
“This positive insurer performance created tailwinds in the first quarter of 2024, which saw ambitious insurer growth targets amid a competitive, well-capitalised market environment.”
According to the report, most insurers in the region shifted their strategies to create more sustainable partnerships with their clients using risk differentiation policies, which included selecting, pricing, and offering solutions to support longer-term profitability and program stability.
“In the short run, this may mean that some risks will transition to new structures or providers, while over the longer term, insureds will benefit from increased program stability and stronger insurer relationships. While traditional ’class’ underwriting will continue, we expect risk differentiation to gain momentum as a mechanism to promote a sustainable alignment of solution-to-risk,” it said.
Furthermore, the directors and officers (D&O) market remained favourable in the quarter. However, the Aon report noted that underwriting may become more conservative in the coming months as the landscape grows increasingly complex with environmental, social, and governance (ESG) disclosure requirements, cyber disclosures, and an increase in collective actions across the region. Meanwhile, property market pricing remained moderate, and pressure to increase retentions eased.
The report also noted that the first three months of 2024 also saw a continual shift in the insurance industry and corporate perceptions of alternative risk solutions such as parametric, captives, and facilities.
“Historically, alternative risk solutions were seen primarily to fill gaps left by traditional insurance. Now, with the exponential growth of data, and the availability of innovative analytic solutions, alternative risk solutions have become an integral component of effective risk transfer and financing strategies. Indeed, corporate risk strategies now commonly include traditional insurance, reinsurance, and alternative solutions, informed, and enabled by myriad data-driven insights,” it explained.
In addition, the report found that the growing frequency and severity of casualty losses from US exposures, and the potential impact on claims of the new regulations anticipated across the region remain a concern among insurers.
You can read the full Q1 2024 Market Insights Outlook: EMEA report here.
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