Aon: “Tension on the insurance market has continued to increase”

4.9.2024 – The current year is characterized by a very heterogeneous insurance market. In addition to tight capacities and high prices, especially in lines with complex risks and for loss-making contracts, an increased appetite for risk and more favorable premium developments are also noticeable. This is shown in Aon's “Market Report 2024”.

Aon plc. has presented the “Market Report 2024” for the German insurance market. The report summarizes the most important developments and provides assessments of the current situation in the classic insurance sectors as well as in selected specialty markets. It is available for download free of charge after registration.

“The tension on the insurance market […] has continued to increase”

Overall, the global risk landscape is presenting companies and insurers with ever greater challenges, it is said. The risk scenario from the ongoing war in Ukraine, the conflicts in the Middle East and the risks in the Asia-Pacific region are causing concern about the predictability of both existing and new risks.

Added to this are increasing terrorist threats, supply chain problems, and new legislation on product and cyber security, for example. In this scenario, accompanied by rising energy costs and the increasingly influential ESG criteria, organizations are required to make far-sighted decisions for their risk management.

“The tension on the insurance market has continued to increase over the past year,” write the authors. At the same time, the market is very heterogeneous, with limited capacity and high prices on the one hand and an increased appetite for risk on the part of insurers on the other.

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Aon assumes that property insurers are willing to compromise

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The main topic of the report is property insurance. Despite a ten percent increase in premiums, the insurer was unable to achieve sustained improvement in results with a loss ratio of 103 percent, it is reported.

“The possibilities for increasing premiums are limited,” Hartmuth Kremer-Jensen, Managing Director and Chief Broking Officer for the DACH region at Aon, is quoted as saying. “Insurers will have to be willing to compromise for the upcoming extensions.”

The challenge of a changing risk landscape in which the development of natural hazard losses plays a key role for market participants remains.

“The classic market cycle is a thing of the past. In addition to risk transfer, companies must have a suitable risk management strategy for the successful transformation to a climate-neutral economy that is supported by sound risk advice,” says Kremer-Jensen.

Companies strive to provide interesting services in order to be attractive to the experts they are looking for.

Aon Market Report 2024

No trend reversal in company pension schemes

A stable to positive trend is emerging in both liability and transport insurance. According to the report, in the liability area, insurers have a greater appetite for risk in the segment of medium-sized industrial companies with low risk profiles. They are more cautious with regard to large corporations and complex risks.

The economical transport of goods is turning away from general issues such as inflation and cyber threats and towards individual customer risk. However, the influence of the global political situation is sometimes also evident here, for example in the form of cancellations of cover for political risks or high additional premiums for difficult risks.

The authors believe that long-term care insurance will increasingly become the focus of company health insurance. They do not see any reversal of the trend in company pension schemes. “On the one hand, companies are striving to reduce the burden on risk and administration, but on the other hand they are striving to offer interesting benefits in order to be attractive as employers to the experts who are so sought after,” they say.

The automotive market is experiencing […] A situation of pressure rarely experienced before in all areas.

Aon Market Report 2024

Car insurers are making huge losses

According to the report, the German Insurance Association (GDV) expects motor insurers to incur losses of around two billion euros this year.

“Car repairs are becoming increasingly complex due to the development of state-of-the-art technology and sensors and are disproportionately expensive in the event of a claim,” it says. The general cost inflation in the area of ​​car claims settlement remains at a historically high level.

At the same time, the high number of identical work steps that occur every day in the contract and claims areas often leads to a backlog and the associated high level of frustration among the permanent staff. The often outdated IT also frequently contributes negatively to the overloaded structures.

German premium increases in motor insurance

In addition, the topic of e-mobility and the high incidental damage costs that often go with it are causing uncertainty. “The automotive market is experiencing a situation of pressure rarely seen before due to various factors in all areas.

For the motor insurance sector, this will result in a challenging renewal in 2025 with corresponding demands for significant premium increases,” it is reported, among other things.