Aon’s latest report warns that while the overall insurance market remains resilient, industry players will need to keep up with a “rapidly hardening” market.
The professional services firm’s 2019 Insurance Market Report found that major wildfires, tropical cyclones, and severe thunderstorms caused US$225 billion in economic losses globally (adjusted for inflation), and US$90 billion in insured damages in 2018 – which is nearly 50% higher than the annual average between 2000 and 2017. This makes 2018 the second highest on record for economic losses due to catastrophe.
2017 still holds the record for the costliest year for economic losses due to catastrophe, at US$358 billion.
Aon noted that catastrophe losses made 2017 and 2018 the most expensive two-year period for insurers ever recorded.
Other key findings of the report include:
Russell Quilley, Aon Canada chief broking officer, commented that insurers’ capital positions remain strong for primary and reinsurance markets despite the 2017-18 period being especially harsh in terms of catastrophe losses. But he also warned that insurers should quickly adapt as conditions could get even worse in the near future.
“It’s clear… that we are in the midst of a transitioning market, and brokers, carriers and clients will need to think differently from the way they have in over a decade,” Quilley said. “In a volatile business environment, it’s imperative for industry players to not only understand the impact of weather-related events and other changes, but also leverage the tools and expertise available to them.”
Quilley added that insurance innovation, as well as efficiencies in risk management and transfer solutions, will be more critical than ever for insurers.