Relevance Through the Market Cycle: 5 Strategic Imperatives for Insurers to Drive Performance

Relevance Through the Market Cycle: 5 Strategic Imperatives for Insurers to Drive Performance
August 21, 2025 12 mins

Relevance Through the Market Cycle: 5 Strategic Imperatives for Insurers to Drive Performance

Relevance Through the Cycle: 5 Strategic Imperatives for Insurers

Relevance is not a phase — it’s a discipline. In a market defined by volatility, insurers must embed strategic relevance into every decision to outperform through the cycle.

Key Takeaways
  1. High-performing insurers succeed through the cycle by planning for profitable growth and remaining relevant to their customers.
  2. Evolving risks and increasingly sophisticated insurance buyers create opportunity for agile insurers to gain a lasting competitive edge.
  3. Five strategic imperatives — growth strategy, capital alignment, data-driven decisions, channel insight and talent transformation — define the path to sustained performance.

In the insurance industry, resilience isn’t about surviving one phase of the cycle — it’s about outperforming through them all. As global risks evolve and structural shifts accelerate, expectations from capital providers and clients continue to rise. Insurers must deliver profitable growth and strategic relevance whether the market is softening or hardening. Those who embed relevance into every decision are best positioned to lead through uncertainty and unlock opportunity at every stage.

Market Context: What’s Shaping 2025?

The forces reshaping insurance in 2025 are intensifying. Capital is abundant, with global reinsurance capacity estimated at a record $720 billion1 and 1H seeing an all-time high of $17 billion2 in catastrophe bond issuance. This signals growing investor demand for non-correlated returns, but it also sharpens competition, squeezes pricing power and raises the stakes for differentiation.

Meanwhile, geopolitical pressures — from protectionism and civil unrest to persistent inflation — are complicating underwriting assumptions and dragging volatility into claims environments. Interest rates remain flat across major markets, leaving little room for investment yield strategies to paper over underwriting shortfalls.

The market may be softening, but risk is growing.

Client Expectations are Evolving

Commercial insurance buyers are increasingly demanding multi-year, multi-line solutions that integrate risk financing, reduce volatility and generate enterprise value. To effectively respond while driving profit and delivering consistent returns to shareholders, insurers themselves — as reinsurance buyers — are evolving. They are seeking structures that are agile, transparent and strategically aligned to their own customers’ objectives. Insurers must pivot from product suppliers to performance partners. That means being proactive, insightful and deeply attuned to client needs across geographies and sectors.

However, legacy operating models, rigid capital structures and siloed distribution strategies are holding some insurers back. Those who evolve now, aligning relevance with agility, will be best positioned to extract value through the market cycle.

Performance Benchmarks Highlight the Growth-Return Link

Aon’s global analysis of 120 insurers from 2013 to 2024 confirms a clear pattern: Strategic focus and relevance consistently drive stronger financial outcomes — regardless of market conditions. Our research shows that:

  • The gap in profitability of high and low performers is consistent through the cycle.
  • High performers sustain growth and underwriting profits even as rating indexes decrease.
  • Customers and distribution partners reward re/insurers that have stayed constant through the cycle with higher growth when rates turn and increase.
  • Insurers in the bottom quartile grow faster than the market during the soft phase of the cycle to the notable detriment of underwriting profits.

We reflect on how these figures have evolved since our FY 2023 analysis, noting how approximately 15% of insurers moved above or below the median, including eight carriers that have adopted strategies to significantly improve their positioning in either returns or growth.

2025 Profitable Growth Web chart

Key Findings: Strong Returns, Slower Growth and Segment Divergence

  • In 2024, the cumulative composite of 120 insurers delivered a 14.7% return on average equity (RoAE), a 6 percentage point improvement on the prior 10-year (2013 – 2023) average of 8.7%. The combined operating ratio (COR) of 93.6% was the lowest during this decade and a 3.4 percentage point improvement on the 10-year average.
  • Premiums grew 7.5% to $1.9T in 2024 and exceeded the 2013-2023 CAGR of 6.4% (excluding the impact of foreign exchange currency fluctuations) — even though this was the third year of deceleration in growth rate from the high of 10.2% in 2021.
  • There is high variance in RoAE for different property and casualty segments. For the third consecutive year, the segments with the lowest CORs have the most globally diversified portfolios in both insurance and reinsurance and the most specialized (Lloyd’s/Bermuda specialists, specialty primary insurers).

Building The Foundation: 7 Traits of Top-Performing Insurers

What sets top performing insurers apart? Aon has identified seven traits that consistently characterize insurers who outperform in complex, cyclical markets:

  • 01
    Risk Appetite:

    Clarity of risk tolerance that aligns with portfolio design and strategies that adapt to market shocks and new opportunities.

  • 02
    Speed and Agility:

    Fast to respond to emerging market trends, enter and expand in new risk categories and capitalize on favorable conditions.

  • 04
    Underwriting:

    Innovation and alternative techniques to improve risk selection, reduce acquisition costs and make efficiency gains.

  • 05
    Talent:

    Attract and develop the best underwriting, claims and actuarial talent with shared vision and goals.

  • 06
    Distribution:

    Build relevance through carefully considered propositions for key channels to market.

  • 07
    Capital:

    Analytics-driven approach to optimizing the capital stack for efficiency, flexibility and returns.

The bottom line:

Strategic relevance isn’t just a differentiator — it’s a performance driver. Insurers who embed it across the value chain consistently outperform, even in softening markets. Building on research into top-performing carriers, here are five actionable strategies that offer a blueprint for sustaining that edge.

  • 1. Redefine Growth Strategy
    Traits: Risk Appetite | Speed & Agility | Underwriting

    Many boardrooms call for increased revenue — but achieving it means identifying the right opportunities and executing with precision. Insurers must move beyond market generalities and be forensic about rate adequacy, insurability and loss cost trends.

    Actionable Tactics:
    • Review current and actionable risk appetite and risk tolerance statements to inform strategic decision making. Use well-defined and measurable key risk indicators and key performance indicators to effectively monitor and guide the portfolio.
    • Develop a robust business planning framework that facilitates strategic decision making, based on risk appetite and objectives. Use the appropriate data and modeling and make thoughtful use of external market data to plug gaps and uncover adjacent opportunities.
    • Create growth heat maps to overlay exposure development with underwriting appetite and prioritize innovation sprints in underinsured exposures (e.g., biodiversity, intangible assets). Deepen understanding of climate dynamics and the risk profile of high frequency perils like flood, severe convective storm or wildfire.
    • Establish quarterly reviews of rate-on-line and expected return on capital vs. cost-of-capital by product line.
    • Refine models for alternative risk transfer and parametric triggers in sectors with high volatility or low traditional coverage. Actively explore opportunities to serve clients with multi-line and multi-year structured solutions.
    • Align your capital stack in the correct geographies to be able to pivot quickly and move capital around the world as growth opportunities arise.
    Strategy in Action: Precision Planning Unlocks Market Entry

    A global reinsurer made a targeted expansion into select Continental European direct insurance markets — driven by deep analysis, not broad ambition. The team examined client demographics, buying behaviors, historical loss ratios by segment, broker dynamics, commission structures and incumbent carrier profiles. Market concentration and churn rates were also mapped to identify alignment with appetite.

    These insights enabled the reinsurer to define a differentiated proposition, select a target client set and build a business plan with clear metrics to track progress and performance.

  • 2. Align Capital with Strategy
    Traits: Capital | Distribution

    Finding the right balance between risk and capital requires careful planning and strategic decision making. Insurers must reassess whether their capital structures align with where and how they go to market. Disconnected internal structures, rigid legal entities and under-utilized capital all contribute to inefficiency and missed opportunities.

    Actionable Tactics:
    • Map your capital flow and friction points — identify where internal constraints prevent growth.
    • Develop guiding principles for optimal capital structures and benchmark against best practices in the wider market.
    • Review opportunities to drive capital efficiency; optimize reinsurance and consider alternative capital vehicles like sidecars to improve cost efficiency and underwriting responsiveness.
    • Run scenario simulations to stress-test capital deployment against distribution volatility.
    • Perform holistic multi-line reviews to optimize reinsurance expense.
    • Explore raising capital via various strategies including quota shares, side cars and debt to fund growth opportunities.
    • Align and drive deliberate structured engagement with distribution partners to target deployment of capital to products and client segments that support broader strategic objectives.
    Strategy in Action: Capital as a Growth Engine

    A global reinsurer has leveraged approximately $8 billion in third-party investments through its capital partners insurance-linked securities business and joint ventures — supplementing its balance sheet by 75%. This capital structure enables the reinsurer to write larger lines, support clients consistently through the cycle and expand its property catastrophe reinsurance portfolio. In Q2 2025 alone, the strategy generated nearly $100 million in fee income.

  • 3. Invest in Data-Driven Decision Making
    Traits: Data & Analytics | Underwriting | Talent

    AI and analytics are transforming how insurers detect fraud, engage clients and model loss cost. But many insurers still struggle to connect data insights with core business decisions — especially in day-to-day underwriting. Forty percent of insurance employees report a need for better technological resources, compared to 30% in other industries, according to Aon’s Employee Sentiment Study.

    Actionable Tactics:
    • Conduct a maturity audit across data architecture, analytics pipelines and business intelligence tools against your business strategy and craft a plan to fill gaps.
    • Launch a dedicated data integration task force to improve speed of insight delivery to portfolio and performance decision makers and underwriters, embedding metrics and feedback loops to measure improvements and pivot when needed.
    • Prioritize insights-enabled underwriting, leveraging the full breadth of external and internal data and strengthening information connections between key functions such as claims.
    • Incorporate data and analytics synergies into evaluation of M&A targets and seek opportunities to improve and scale insight generation in post-M&A integration.
    • Build analytics training into performance plans, develop “insight translators” across teams and provide feedback loops to continuously learn and improve.
    • Stress test performance of accumulation management systems against new technologies and the use of AI.
    Strategy in Action: Data Discipline Drives Margin

    A UK motor underwriter, consistently delivers a COR 30 points below the market average by focusing on non-standard, high-margin risks. Its edge lies in disciplined data strategy: proprietary inflation trend detection, a 20-year pricing and claims dataset and in-house analytics designed to extract actionable insights. Technical expertise and data consistency underpin every underwriting decision — turning complexity into competitive advantage.

  • 4. Understand Client and Channel Needs
    Traits: Distribution | Speed & Agility

    Your clients and brokers are not static — your engagement strategy should not be either. Insurers must dive deeper into segmentation by sector, complexity and buying behavior to deliver value that resonates.

    Actionable Tactics:
    • Prioritize distribution channels in line with strategic objectives. Align cost and efforts to those that will best support execution of the portfolio plans.
    • Establish actionable short, medium and long-term distribution goals with target channels, creating engagement frameworks that drive continuous connectivity with channel partners at all levels.
    • Equip distribution teams with real-time appetite mapping and trading insights.
    • Optimize client and broker survey insights and run channel roundtables to gather frontline insights on client shifts, appetite gaps and decisions on carrier selection.
    • Benchmark with peers and develop differentiated propositions, including ones tailored to verticals like renewable energy, life sciences or transportation.
    Strategy in Action: Distribution Innovation Meets Sector Relevance

    A large independent UK MGA has streamlined distribution by enabling automated underwriting via low-friction broker platforms. Its product set is tailored for digital delivery — reducing operational drag and enhancing broker engagement. In 2024, the MGA deepened its sector relevance by entering the carbon insurance market and launching an M&A team focused on representations and warranties for the renewable energy industry — aligning product innovation with emerging client needs.

  • 5. Rethink Talent Strategy for the Next Cycle
    Traits: Talent | Speed & Agility | Data & Analytics

    Your future operating model will require different talent. Whether it’s embedded analytics, client co-creation or agile response teams, your workforce needs a radical rethink. With 60% of employees in the insurance industry considering or planning to leave their current role within 12 months3, how do you attract and retain talent?

    Actionable Tactics:
    • Integrate talent strategies with business objectives to ensure cohesive organizational growth.
    • Leverage data to gain insight into workforce needs and potential hires, optimizing real-time organizational and talent planning.
    • Branch out recruitment processes into otherwise untapped areas.
    • Utilize data to build broader line management strategies that enhance employee recruitment and retention, while enriching success profiles by focusing on innovative and unique skills.
    • Implement smart assessments throughout the hiring process to develop individuals, teams and the organization, ensuring that these assessments are effectively tracked, utilized and interpreted.
    Strategy in Action: Talent Strategy Fuels Scalable Innovation

    A fast-growing startup in Lloyd’s is treating talent as a strategic asset. Its approach combines a strong employer brand — positioning them as a tech-led insurer — with department-level learning budgets that empower teams to upskill and stay competitive. Cross-functional squads of actuaries, data scientists, underwriters and strategists foster a nimble, fail-fast culture, enabling rapid adaptation and innovation at scale.

Choose Your Strategic Path

Success in today’s market can be distilled to two strategic models:

  • Consistent and Reliable: Uphold disciplined underwriting, maintain stable operations and manage expectations with customers to align to their needs. This will allow companies to deliver value and seek opportunity for continuous improvement in effectiveness and efficiency of operations and capital.
  • Bold and Transformational: Embrace innovation, invest in data and technology for better decision making, pursue scale and take purposeful risks. recalibrate capital, operating and talent models to unlock new markets and position for long-term advantage.

Both paths require discipline, actionable insight — and relevance.

Make Relevance a Strategic Habit

Relevance is a mindset. It’s how you stay connected to clients, channels and capital partners. It’s also how you profitably grow through the market cycle. The insurers who win in this market embed relevance into everything they do — from capital deployment and talent strategy to distribution focus and underwriting innovation.

Learn how Aon can help your organization lead through uncertainty and unlock opportunities at every stage of the cycle.

Aon’s Thought Leaders
  • Paul Campbell
    Head of Growth, Strategy and Technology Group
  • Brandon D. Miller
    Consulting Director, Strategy and Technology Group

1 Source: Aon’s Reinsurance Market Dynamics report
2 Source: The Aon Securities Proprietary 144A Catastrophe Bond Database
3 Source: Aon Employee Sentiment Study

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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