Asia’s Q2 insurance pricing stays flat

Overall capacity was sufficient but challenges persist in property and flood risks

Insurance pricing remained mostly ‘flat’ during the second quarter (Q2 2024), with some reductions in specific areas, though targeted increases were seen in underperforming segments like Automobile, Casualty/Liability, and Property markets. 

The insurance market continues to experience a rise in large loss notifications, but this has not yet disrupted the current buyer-friendly conditions. Insurers are increasingly focusing on specialty lines, particularly in renewable energy and infrastructure, and these favourable market conditions are expected to persist.

Capacity was generally sufficient, but certain challenging risks, such as property and flood in specific regions, faced capacity limitations. 

Underwriting practices remained cautious, prioritising profitability, though insurers showed flexibility in Directors and Officers placements. In the Automobile sector, rising claims and costs pressured insurer profitability, but new market entrants increased competition.

Casualty/Liability conditions varied, with risks involving significant US exposures or complex products facing more challenging terms. Cyber insurance saw moderate conditions with flat renewal pricing and sufficient capacity, though underwriting scrutiny remained high. 

Directors and Officers insurance experienced healthy competition, particularly for in-appetite risks, though US-listed risks faced cautious underwriting. 

Property insurance conditions varied widely by region, with more conservative approaches outside of China and Hong Kong, particularly for natural catastrophe and flood risks.

Globally, reinsurance renewals in 2024 have shown steady improvement, with increased capacity and a greater appetite from reinsurers leading to rate reductions for property catastrophe risks and better terms at mid-year, according to Aon’s latest Reinsurance Market Dynamics report. 

Reinsurance capital hit a new record of $695b at the end of Q1 2024, bolstered by retained earnings, recovering asset values, and a surge in catastrophe bond market inflows, with ILS capital reaching an all-time high of $110b in Q2.

Despite this strong capitalisation, the insurance and reinsurance markets remain fragile. Natural catastrophe losses continue to be volatile, with 37 events in 2023 each exceeding $1b in insured losses. 

Additionally, adverse reserve development and social inflation contribute to an uncertain outlook for the Casualty sector. A significant deterioration in Casualty loss trends or severe natural catastrophe events could materially impact future market dynamics. The upcoming Atlantic hurricane season, predicted to be active, is also being closely monitored for its potential impact.