The insurance market in Q2 2024 remained growth-oriented yet disciplined, with insurers focusing on underwriting and pricing for long-term profitability and program stability. This created a competitive and well-capitalized market environment, offering buyers opportunities for favorable pricing and coverage options, especially for preferred risk types.
One notable trend in Q2 was the buyer-friendly Property market conditions fueled by insurer growth ambitions. The US market saw its most favorable conditions in almost seven years, with desirable risks experiencing pricing outcomes ranging from single digit increases to low double digit decreases. However, risks in certain regions and high-risk sectors faced more challenging market conditions and less favorable placement outcomes.
US Casualty exposures, both domestic and international, continued to face scrutiny due to prior year reserve deterioration and concerns over nuclear verdicts and adverse litigation trends. Risks with US exposures and heavy industry sectors experienced rate increases, more restrictive terms, and higher Umbrella attachment points. On the other hand, well-performing risks without US exposures saw healthy competition as insurers sought growth opportunities.
The Directors & Officers (D&O) and Cyber insurance markets were characterized by healthy competition and abundant capacity. While some D&O insurers focused on program stability were less inclined to decrease prices, the Cyber insurance market remained buyer-friendly with continued savings, especially in high excess layers. Interest in Cyber insurance is expanding beyond the US and Europe, driven by growing awareness of cyber incidents and capacity.
Reinsurance renewals in 2024 showed a steady improvement, with increased capacity and reinsurer appetite leading to rate reductions for Property catastrophe risk and improved terms and coverage. Reinsurance capital reached a new record of $695 billion at the end of Q1 2024, driven by retained earnings, recovering asset values, and new inflows to the catastrophe bond market.
Despite a well-capitalized market, the insurance and reinsurance landscape remains somewhat fragile due to volatile natural catastrophe insured losses and uncertainties in the Casualty outlook. Adverse reserve development and social inflation add to the uncertainty, with forecasts predicting an active Atlantic hurricane season for 2024. However, the capacity-rich market focused on sustainable growth and program stability benefits clients, who are taking advantage of the current market conditions to restore coverages and limits.
In conclusion, the growth-oriented market in Q2 2024 presents opportunities for buyers to secure favorable pricing and coverage options, especially for preferred risk types. Insurers‘ focus on underwriting and pricing for long-term profitability and program stability has created a competitive and well-capitalized market environment, offering buyers a range of options to meet their insurance needs.