Aon's Global Market Insights Report
Q2 2023

Our latest Global Market Insights Report dives into the macro events that impacted the insurance market in the second quarter of 2023 and highlights trends across pricing, capacity, underwriting, limits, deductibles and coverages. It also examines the effect that catastrophic weather events and climate change concerns are having on market behaviors.

Here are the key trends we’ve seen in the previous quarter:

• A conservative market environment continued in Q2 as uncertainty related to economic and social inflation, rising loss costs, global tensions, and a slow supply chain recovery continued. Insurers remained committed to adapting their appetite, capacity deployment, coverage language, attachment points and pricing to manage their portfolio performance while focusing on targeted growth for lower-hazard, quality risks, and products such as Directors & Officers and Cyber where portfolio performance targets have been achieved and coverage terms and conditions have been clarified.
• Despite more orderly mid-year reinsurance renewals which led to a modest reprieve in reinsurance pricing and terms and conditions relative to the January renewals, Natural Catastrophe-exposed Property risks continued to experience a volatile and challenging market environment. Climate change concerns weighed heavily into Natural Catastrophe risk underwriting amidst a backdrop of Canadian wildfires burning across 20 million acres, several geographies experiencing record-breaking heat waves, rain and flooding, record high sea surface temperatures, and an updated Colorado State University prediction of a higher-than-average number of Atlantic tropical storms and hurricanes during the upcoming 2023 season. Reported property and business interruption values and valuation methodologies remained under scrutiny. Sophisticated modeling and risk quantification tools were increasingly leveraged by risk managers and underwriters to better understand and quantify risk.
• Demand continued to grow for innovation around risk transfer, and alternative solutions gained prevalence amidst an increasingly complex, interconnected and data-enabled risk environment. Alternative Risk Transfer, Structured Insurance, Cross-Industry Facilities, and Captives served as ever-important levers in achieving companies’ financial and risk management goals. Further, parametric products gained momentum, especially for heavily Natural Catastrophe-exposed risks. To accelerate the delivery of index-based solutions, Aon established a global center of excellence for parametric initiatives and products and named a global leader, Cole Mayer, to reinforce our commitment to supporting clients in making better decisions.