Global Insurance Marketplace Insights Q3 2024

1. 01

   Underwriting discipline and conditions for consolidation

   Underwriting discipline, both in the primary and reinsurance markets has been maintained, playing a key role so far in preserving market stability as insurers pursued growth targets without compromise on risk management. Overall, we have seen a measured softening of the market, although certain areas remain pressured, for example within US Casualty where some capacity has been withdrawn or repriced, or in lines exposed to elevated global political uncertainty.

   These conditions, as has been the case in previous market cycles, may set the stage for potential consolidation among insurers, as disciplined organic growth becomes more challenging.

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1. 02

   More attention on catastrophe modeling

   Although the US avoided a “mega catastrophe” in Q3, the third quarter did see a series of natural catastrophic losses globally. In the US there was a number of “smaller” catastrophe losses from “secondary” perils – which are hurting insurers more than they have done in the past, as the reinsurance market distanced itself from providing capacity for these risks – while globally, there were a number of events in areas not regarded as peak risk. It is not clear that the pattern and level of catastrophe losses in Q3 would be likely to shift the prevalent existing trends, which we expect to continue. Insurers were placing increasing importance on clients’ management of catastrophe exposure risk and on the output of catastrophe models due to changing loss dynamics.

   With close attention to detailed exposure data and modelled outputs, insurers were able to adjust their underwriting accordingly, and we saw measured and rational response to losses, maintaining stability in pricing. In particular, we have seen larger clients with well managed risks receiving more favourable deals in this market. Looking ahead, organizations able to present favourably their own nuanced and sophisticated natural catastrophe management and provide good data may expect enhanced negotiations with insurers, and we encourage early engagement with underwriters where possible.

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2. 03

   ESG factors gaining importance

   Insurers are increasingly integrating environmental, social and governance (ESG) strategies into their underwriting processes, assessing organizations based on carbon emissions and other sustainability metrics. This shift is part of a broader trend where insurers are positioning themselves to offer additional capacity for good ESG risks. While it is not fully possible to quantify this capacity as distinct from existing offerings, it reflects a strategic move to transition business portfolios towards more sustainable practices. The focus on ESG also influenced market dynamics in Q3 by stabilizing certain segments and preventing further market softening. Insurers differentiated themselves not just on price but also on their commitment to sustainable practices.

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1. 04

   Focus on cyber model development

   Although insurers are actively working to differentiate themselves beyond pricing, we saw only limited new product development or changes in coverage. Insurers have however focused on deeper appreciation of systemic risk and client risk management in order to offer more relevant capacity. In Cyber, for example, we saw a greater focus on managing systemic cyber events, by developing better models to deploy capacity more effectively and potentially to offer larger limits. We expect the focus on cyber risk modeling to provide organizations with better coverage options, particularly where businesses can bring their own advanced predictive modeling to conversations with insurers.

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1. 05

   Continued digitization of insurance value chain

   Insurers continue to refine their digital processes to become more efficient and reduce frictional costs. Although this process development isn’t directly related to product innovation, it enables insurers and others across the insurance value chain to access business, achieve efficiencies and offer more competitive terms. For our part, we continue to roll-out our Broking Platform to thousands of brokers around the world, allowing them to work within one system and connecting them to insurers.

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Disclaimer

Please note the observations in the Global Marketplace Insights Spotlight video series are based on our experience with WTW clients and trends across the global markets, but they are not a whole market study.