News from Aon Canada
Weathering Mother Nature
Canada’s insurance market remains competitive amid steep insured losses for global industry in 2017: Aon Report
Extreme weather events made 2017 one of the costliest on record for the global insurance industry. From Atlantic hurricanes to California wildfires to a drought in Europe, Mother Nature took a toll on insured losses, driving them to the second-highest level recorded, according to the latest Aon Insurance Market Report on the global industry's performance in 2017.
“The bad news for insurers is clear: 2017 was one of the worst years for insured losses on record,” said Rohan Dixon, Executive Vice-President and Chief Broking Officer, Aon, Canada. “The good news, though, is that insurers’ capital positions remain strong, meaning that the industry’s capacity to meet insured losses and operate profitably is not only stable, but growing.”
At US$353 billion, inflation-adjusted economic losses in 2017 were the second highest on record, after 2011 (US$486 billion). Atlantic hurricanes were the most significant cause (US$220 billion), along with flooding in China, wildfires in California and the Southern European drought. Insured losses reached US$134 billion, second only to 2011.
Against those losses, global insurer capital grew to US$4.5 trillion in the first half of 2017.
The report also draws attention to the strength of the Canadian insurance market, which “continues to be an attractive location for capital deployment, due to industry profitability (higher than the U.S. or UK industries) and economic and political stability.”
To remain competitive, Canadian commercial insurers and brokers are creating innovative solutions for clients and deploying advanced data analytics to develop strategies for better bridging capital with emerging risks, according to Aon’s Rohan Dixon.
Emerging industries also pose challenges. “New industries, such as Drones or Cannabis, are creating challenges for some insurers however others are taking advantage of the pace and getting a foot hold before the rest of the market catches up. This is creating new premium and risk control opportunities for insurers,” states Dixon.
Among other key findings
- The reinsurance market is well capitalized, with global reinsurer capital growing by two percent in 2017 and reaching a record US$605 billion.
- The alternative capital market, which includes catastrophe bonds and industry loss warranties, has replaced all the capital lost due to 2017 catastrophes.
- Abundant capital is fueling both innovation and competition within the industry, forcing insurers to better understand and evaluate underwriting risks.
- The top risks for insurers identified in the 2018 Aon Insurance Market Report include damage to reputation/brand, regulatory changes, increasing competition, failure to innovate, political uncertainty, cybercrime and third-party liability (excluding E&O).
Click here to read the full report.
For further information please contact the Aon media team: Alexandre Daudelin, +1.514.982.4910.