Global insurance trends in 2024 and beyond

As an international insurance broker, Aon sees an increasingly interconnected and complex risk landscape continuing to shape organisational risk management strategies and the risk capital market response. 

We asked Sam Ketley, Head of Enterprise Risk Solutions at Aon New Zealand, to look back at some of the key takeaways from 2023 and what to expect from 2024 and beyond.  

Local 

• Flooding events across New Zealand resulted in significant losses for local insurers and reinsurers, particularly in the domestic, commercial, and motor segments, and consequential pricing increases are anticipated. 

Global 

• Pricing increases were moderate. However, natural catastrophe exposed property risks, and liability risks with significant US exposures experienced ongoing challenges. Inflationary pressures continued to contribute to cost increases in 2024.   
• Insurers continued to develop and focus their appetite and capacity deployment, creating healthy competition and options for preferred risk types.  
• Reinsurance (insurance for insurers) costs generally flattened over 2023. 
• Alternative risk transfer solutions gained momentum across both preferred and non-preferred risk types. 
• While the underwriting environment remained restrained, there was an increasing focus on other matters such as corporate responsibility. 

The positive global competitive trends have continued into 2024 and it is expected these will impact local markets once they have recouped their losses from 2022/23. A return to profitability for both reinsurers and insurers, globally and locally, will increase the options available for insureds, especially if there are no substantial natural catastrophes or market impacting events.   

Resilience 

Many organisations have demonstrated resilience amidst the economic volatility, which has been fuelled by spikes in interest rates and inflation, as well as geopolitical instability, social unrest, and humanitarian crises spanning multiple continents. These factors are exacerbated by devastating natural disasters and mounting climate concerns. While every community, business, and economy has forged their own unique journey, resilience has been a common denominator. 

Resilience has also shaped the risk and insurance community in 2023. Economic inflation, slow supply chain recovery from Covid, rising labour costs and persistent natural disaster activity have pressured property loss costs and extended recovery periods. The regulatory environment has also continued to become more complex. It has focused particularly on addressing matters relating to consumer protection, insurer solvency, cyber, and the use of generative artificial intelligence, among many other issues. 

During the year, reinsurers and insurers responded to these and other dynamics of the risk and insurance environment by implementing their own resiliency measures, many of which impacted insurance market conditions. These included refocusing their appetite, adjusting their underwriting policies, shifting their capital allocations and pricing models, streamlining their organisations, and aligning with business partners who share their values. 

These market dynamics played out decidedly in the final quarter of 2023. We saw healthy appetite, underwriting flexibility, the availability of coverage options and abundant capacity for well-performing, preferred risk types, particularly as insurers sought to meet year-end performance targets. In contrast, challenging risk types and areas not targeted for insurer growth faced greater underwriting scrutiny, higher pricing and had fewer options.  

Across all risks, Aon observed robust underwriting information and risk differentiation. These were key drivers of superior renewal outcomes, and evidence of investment in corporate responsibility initiatives continued to positively impact underwriting decisions. 

Looking ahead

Aon expects many of the economic, geopolitical, climate and humanitarian events that shaped 2023 to continue to evolve in 2024. New trends will undoubtably emerge, creating challenges as well as opportunities. 

In the latest edition of Aon’s Global Insurance Market Insights report, we highlight five trends to watch in the short to medium term. These include: 

• Cyber attackers will continue to exploit vulnerabilities and adapt their methods to sidestep controls, gain unauthorised access to systems, and exfiltrate information from corporate infrastructures. In addition, insider risk stemming from IT and other layoffs, use of artificial intelligence (AI) and other emerging technologies, and an increase in class action and other civil and criminal lawsuits related to data protection and privacy, will likely pose new challenges. 
• Core inflation will remain subject to volatility stemming from geopolitical instability and changes in economic policy, creating more volatility for corporations and an invisible tax on consumers. 
• Demand for parametric covers will continue to increase as organisations seek access to quick liquidity after a disruptive event and/or to address gaps in traditional insurance cover and/or to cover non-traditional risks (non-damage business interruption, contingent exposures, and many more). 
• The worker-driven market will likely continue as unemployment rates remain at low levels, prompting employers to adapt their growth agendas to recognise the need for competitive benefits and accommodating work environments. Worker upskilling and reskilling will be prioritised in workforce planning strategies. 
• The energy transition will require significant investment in infrastructure, new technologies and process enhancements as demand for cleaner energy sources increases. Supply chains will be vulnerable to increased reliance on certain raw materials, new technologies and manufactured goods. Higher interest rates and inflation will create challenges to raise, deploy and protect capital for investment in new assets. 

Longer-term global insurance trends 

Some longer-term global insurance trends that are expected to continue or gain prominence in the coming years include: 

• Increasing use of technology: Insurers are likely to adopt more digital tools and technologies to streamline operations, enhance customer experiences, and improve underwriting and claims processes. 
• Personalisation: With the use of data analytics and AI, insurers can provide more personalised products and services tailored to individual needs and behaviours. 
• Cyber insurance: As cyber threats continue to evolve, the demand for cyber insurance is expected to increase, with insurers offering specialised coverage to protect businesses and individuals from data breaches and cyber-attacks. 
• Climate change impact: Insurers will continue to reevaluate their underwriting strategies and risk models in response to the increasing frequency and severity of natural disasters and extreme weather events associated with climate change. 
• Regulatory changes: Ongoing regulatory developments such as new data protection laws, emerging risks, and changing consumer expectations may influence the insurance market and require insurers to adapt their products and practices. 
• Shift towards sustainability: Insurers are increasingly focusing on environmental, social, and governance (ESG) factors in their investment decisions and underwriting practices to align with sustainable business practices and address societal challenges. 

These trends are expected to shape the global insurance industry in the long term and drive innovation and changes in the way insurance products are developed, distributed, and managed. 

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