News from Aon Canada
Weather-related catastrophes drove losses, but capacity of insurance industry continues to grow
Underwriters are looking to data and analytics to identify and develop new solutions to bridge available capital with new and emerging risks, according to a report from Aon
TORONTO, September 27, 2018 – From Atlantic hurricanes and California wildfires to drought in Europe, extreme weather-related events made 2017 one of the most costly on record for the global insurance industry, but insurers’ capacity to meet their losses continues to grow. That is according to the 2018 Insurance Market Report from Aon, a leading global professional services firm providing a broad range of risk, retirement and health solutions.
“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.
“The Canadian commercial marketplace continues to be competitive, as insurers and brokers are creating innovative solutions for clients and deploying advanced data analytics to develop strategies for better bridging capital with emerging risks. The industry must continue to look for such innovations and efficiencies, both in risk management and in transfer solutions,” added Dixon. “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”
- 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.
- Canada 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.
- 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, cyber crime 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.