Insurance Marketplace Realities Spring Update 2024

We’ve seen a lot of markets over the years, and the industry has never struggled to come up with creative ways to describe them. We’ve had “hard” markets, be they 2023’s property market or 2020’s across-the-board version. Looking back at 2015 to 2018, conventional wisdom would characterize that era as a “soft” market. 2008 and the financial crisis brought us the “unsettled” market. We’ve even nodded sagely at the notion of “dichotomous” markets, which to me sounds like every market that has ever existed.

This is all fun and games. But here is a simpler – dare I say happier – question to wrestle with: what does a good market look like? Because if there’s ever been a time when that welcome description might apply, it’s right now.

Consider the following. Many insurance companies are reporting record net income and material growth of gross written premiums. Industry titans are bullish on the state of the market. And, if they’re not descending gracefully from 2023’s exceptional highs, business lines are generally stable. Think about that; if stability and soft(er) conditions are as bad as it gets, sans highly distressed lines of business (such as terrorism), I would suggest that means things are actually pretty good. Or, as Evan Greenburg put it, “The P&C underwriting environment in North America overall is quite favorable, financial lines aside, with pricing exceeding loss costs, which remained steady.”^[1]

Perhaps this serene optimism has been hard won. There’s no doubt that risk professionals, battle-hardened by the events of 2020 to 2023, have learned to be more sanguine these days. In 2016, a mid-single-digit rate increase would have felt like a catastrophe. Now, that is simply described as an “inflation factor.” Context and perspective are everything. This is worth bearing in mind when we consider our clients are trading largely in a buyer’s market where capacity remains prevalent – sans excess casualty in distressed risk classes (e.g., auto and terrorism) – and they can start pushing to improve programs in every way, from structure and pricing to policy terms. This is a time where WTW is successfully pushing the market to be creative with capital and to develop solutions that solve the most challenging risk problems of the day.

Pessimism is forever in fashion and, as always, there’s plenty to go round. Political unrest is rife. War is raging in two major global regions. Social inflation continues to push runaway liability claims. And we all know what high surface temperatures in the Gulf are harbingers of. The challenges and hazards we face are significant, wide-ranging and very real. For once, however, I would like to leave you with a different take-home. Collectively, we have a trillion-dollar-plus surplus in the bank, investment yields are trending upwards from 3.7% and insurers are generating meaningful improvements to net income. That means our industry is exceptionally well positioned to bring some much-needed stability to the wider world. You might want to whisper it, but it’s still the truth: this is a good market, and we should all be celebrating it.

For more insight on how you can prepare for a challenging marketplace, contact your local WTW representative.

Footnote

1. Chubb Records 13.3% Uptick in Q1 Net Income on Underwriting. Return to article

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