Aon's Global Market Insight
Q1 2021 | Regional Highlights

Aon’s Global Market Insights report features insights related to risk, reinsurance, health, retirement and investments powered by proprietary data and cutting-edge data science. Highlights from the latest report include;

Global Trends

The market remains challenging; however, there are signs that a more moderate environment is emerging as:

  • Insurer growth goals have taken the place of a prolonged period of portfolio remediation
  • COVID losses have not materialized as expected
  • New capacity continues to flow into the market

As economies rebound in 2021 with the rollout of COVID-19 vaccines, traditional risk and exposure variables are likely to normalize while these key longer-term issues gain relevance in insurer appetite and rating models:

  • Environmental, Social and Governance issues (i.e., Inclusion & Diversity, Climate Change)
  • Supply chain resilience and the increased focus on local sourcing of strategically important manufacturing and goods
  • The increase in frequency and severity of weather-related events
  • Special Purpose Acquisition Companies
Read Global Trends

View from the top

The Q1 report also features Lisa Stevens, Aon’s Chief People Officer, as she shares her perspectives around the rapidly changing Inclusion & Diversity (I&D) landscape globally.

“Inclusion & Diversity isn’t only a Human Capital Management journey. Legislation, regulation, and investor pressures are driving increased diversity in board composition – including gender, ethnicity, sexual orientation, and skills/experience - and increased transparency in director candidate pipeline and policies. With tightening investor and proxy advisory firm overboarding policies, it is becoming more important than ever to have robust pipelines of diverse boardroom talent available.”

Read View from the top

Global Health Trends

The pandemic has accelerated organizations’ recognition of the importance of employee health and wellbeing to the success of their businesses. The concept of workforce resilience is not new, but it is undoubtedly enjoying a new vogue as the pandemic has forced organizations to focus on their key people-related risks, such as employee wellbeing, talent retention, implementing operational improvements and new, innovative working models and technology. Heightened awareness of issues like emotional and social wellbeing due to social restrictions and remote working, together with the impact of physical inactivity is a good thing, but it is important that as we embrace what emerges next, the focus on employee health, safety and wellbeing is sustained.

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Global Reinsurance Trends

The reinsurance market is still well capitalized but is taking some loss from a secondary peril (winter storm). In Q1, insurers faced nearly USD21 billion in natural disaster losses; the highest Q1 total since 2011, 25 percent above the recent 10-year average (2011-2020) of USD16 billion, and 73 percent higher than the median of USD11 billion). Aon estimates that global reinsurer capital had increased by 4% to a new high of USD650 billion (by the end of 2020), driven by continued capital market recovery, new equity issuance and US dollar depreciation.

Read Global Reinsurance Trends

Global Retirement Trends

Governments globally are enacting legislation to provide relief given the importance of retirement plans to support employee retirement outcomes in the wake of the COVID-2019 pandemic. Plan sponsors should discuss all law changes with their actuarial, investment, and executive compensation consultants to understand the impact on their plans and organizations and determine how best to respond to the opportunities the new laws present.

Read Global Retirement Trends

Global Investment Trends

The acceleration of COVID vaccination programs in the developed world, combined with easy monetary policy and more fiscal stimulus, is pushing GDP growth and inflation estimates higher. These changes are reverberating across global markets pushing global bond yields and equities higher.

Read Global Investment Trends

Geography Trends: North America

Pricing increases continue but are decelerating; however, some lines of business such as Workers Compensation, Cyber and Professions (namely, Lawyers & Accountants) which previously experienced less challenging market conditions are now also starting to experience notable upward pricing trends. Insureds continue to explore any and all options including self-insurance, creation or expanded use of wholly owned captives or non-owned captives, alternative products, alternative sources of capital, and changing insurance program architecture (e.g., higher deductibles).

Geography Trends: North America

Geography Trends: EMEA

Pricing is moderating slightly as insurer focus is beginning to shift from remediation to profitable growth. Directors & Officers, Cyber, Natural Catastrophe Property, Contingent Business Interruption, and Construction, as well as energy, food, and waste risks remain particularly challenging, and underwriting appetite is focusing. There is a slow but steady migration toward alternative pricing models. Insurers are increasingly imposing risk management / control measures as a prerequisite for offering favorable terms. Regulators have driven industry changes, creating both short- and long-term impacts

Geography Trends: EMEA

Geography Trends: Asia Pacific

Some insurers have rebalanced their portfolios and are, once more, focused on growth whilst others continue to focus on remediation and a return to profitability. While the end seems to be in sight, the ultimate financial consequences of COVID-19 and related restrictions, as well as their impacts on risks, exposures, and claims, remain difficult to estimate and quantify. Insurers are imposing across-the-board clarifications and exclusions, particularly related to silent cyber, infectious disease and contingent business interruption. Newly proposed language is at the heart of many negotiations.

Geography Trends: Asia Pacific

Geography Trends: Latin America

With COVID-19 still raging in some countries and restrictions in place, there is significant uncertainty in the market that, combined with ongoing insurer profitability challenges across the region, is creating a difficult market environment with rate increases, capacity contractions, and re-focused appetite. The underwriting process is becoming more stringent and conservative, and more risks are being referred to central teams. This is leading to delays and creating complexity. The local reinsurance market is rewriting some books of business which could bring capacity constrains in the mid-term.

Geography Trends: Latin America