Weather-related catastrophes drove losses, but capacity of insurance industry continues to grow
September 27 2018 - 12:00PM
From Atlantic hurricanes and California wildfires to drought in
Europe, extreme weather-related events made 2017 one of the most
costly on record for the global insurance industry, but insurers’
capacity to meet their losses continues to grow. That is according
to the 2018 Insurance Market Report from Aon, a leading global
professional services firm providing a broad range of risk,
retirement and health solutions.
Quotes“The bad news for insurers is clear: 2017
was one of the worst years for insured losses on record,” said
Rohan Dixon, Executive Vice-President and Chief Broking Officer,
Aon, Canada. “The good news, though, is that insurers’ capital
positions remain strong, meaning that the industry’s capacity to
meet insured losses and operate profitably is not only stable, but
growing."
“The Canadian commercial marketplace continues to be
competitive, as insurers and brokers are creating innovative
solutions for clients and deploying advanced data analytics to
develop strategies for better bridging capital with emerging risks.
The industry must continue to look for such innovations and
efficiencies, both in risk management and in transfer solutions,”
added Dixon. “New industries, such as Drones or Cannabis, are
creating challenges for some insurers however others are taking
advantage of the pace and getting a foot hold before the rest of
the market catches up. This is creating new premium and risk
control opportunities for insurers.”
Key findings
- At US$353 billion, inflation-adjusted economic losses in 2017
were the second highest on record, after 2011 (US$486 billion).
Atlantic hurricanes were the most significant cause (US$220
billion), along with flooding in China, wildfires in California and
the Southern European drought. Insured losses reached US$134
billion, second only to 2011.
- Against those losses, global insurer capital grew to US$4.5
trillion in the first half of 2017.
- Canada continues to be an attractive location for capital
deployment, due to industry profitability (higher than the U.S. or
UK industries) and economic and political stability.
- The reinsurance market is well capitalized, with global
reinsurer capital growing by two percent in 2017 and reaching a
record US$605 billion.
- The alternative capital market, which includes catastrophe
bonds and industry loss warranties, has replaced all the capital
lost due to 2017 catastrophes.
- Abundant capital is fueling both innovation and competition
within the industry, forcing insurers to better understand and
evaluate underwriting risks.
- The top risks for insurers identified in the 2018 Aon Insurance
Market Report include damage to reputation/brand, regulatory
changes, increasing competition, failure to innovate, political
uncertainty, cybercrime and third-party liability (excluding
E&O).
Click here, to read the full report.
About Aon Aon plc (NYSE:AON) is a leading
global professional services firm providing a broad range of risk,
retirement and health solutions. Our 50,000 colleagues in 120
countries empower results for clients by using proprietary data and
analytics to deliver insights that reduce volatility and improve
performance.
Media ContactsFor further information, please
contact Alexandre Daudelin (514.982.4910)
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