According to Aon’s latest North America Market Overview report, North America’s insurance market remains favorable for buyers as 2024 progresses. In Q3, insurers pushed for year-end growth. While some lines have faced challenges, buyers benefit from competitive conditions in several key areas.
Mixed Signals Across Casualty Lines
The casualty insurance sector presents a mixed outlook. General liability and workers compensation are experiencing relatively stable conditions, while Auto insurance faces steeper challenges, with rate increases driven by unfavorable loss trends. The U.S. Umbrella/Excess Liability market is similarly strained, but conditions remain more favorable in Canada, highlighting regional disparities.
Property Rates and Hurricane Impact
Property insurance rates are showing signs of moderation, with competitive offerings for well-managed risks with strong loss histories. However, recent hurricane activity, particularly Hurricane Milton with projected losses between $25 and $40 billion, may influence upcoming reinsurance renewals, potentially halting anticipated rate decreases.
Downward Pressure on Pricing Amid Growth Ambitions
Insurers’ growth targets are creating downward pressure on pricing in many areas. While profitability remains a key focus, the pursuit of market share has tempered aggressive rate reductions. Property insurance pricing remains moderate, with reductions available for desirable risks but slight increases for those with more complex profiles.
Conversely, Cyber and Directors & Officers (D&O) insurance are seeing moderate to significant rate reductions, driven by increased competition and a favorable capacity environment. However, the pace of D&O reductions is slowing.
Capacity and Competition Drive Flexibility
Capacity across most insurance lines remains ample, as established carriers expand their appetite and new market entrants add competition. Well-performing shared and layered property programs are often oversubscribed, while higher-risk properties and excess liability placements still face some capacity limitations. Cyber and D&O, on the other hand, enjoy abundant capacity, and the competitive environment is pushing underwriters to offer more flexibility and better terms for Property and Cyber policies.
Businesses with solid cyber security practices are seeing benefits, including increased coverage limits and the ability to reduce the number of participants on their property policies during renewals. Deductibles have largely remained stable, maintaining consistency across the market.
Underwriting Flexibility in Competitive Lines
Aon’s report highlights that increased competition is making insurers more accommodating in certain areas, helping to address inconsistencies that arose during the hard property market. Underwriters are particularly flexible in lines like Property, Cyber, and D&O, resulting in more favorable terms for well-prepared buyers. However, the application of PFAS exclusions in Casualty is becoming widespread.
The Bottom Line
The current insurance landscape offers ample opportunity for businesses to secure favorable coverage terms, especially in Cyber, D&O, and well-managed Property lines. As competition grows and insurers focus on profitable expansion, buyers are in a strong position to leverage these market conditions for better coverage and pricing.