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Easing of Capacity Constraints Heralds ‘Orderly’ Reinsurance Renewals: Aon
Constructive collaborations and client centricity will be key to successful negotiations

LONDON, 7 September 2023 - Aon plc (NYSE: AON), a leading global professional services firm, today released its Ultimate Guide to the Reinsurance Renewal – an assessment of key market dynamics to help clients navigate volatility and make better decisions in the approach to the Jan. 1, 2024 renewal period.

The report reveals that following a challenging Jan. 1, 2023 renewal period with market uncertainties, the forthcoming renewals are expected to be “more orderly”; the reinsurance market is now in a more sustainable position, with rate adequacy for property catastrophe and strong investment returns already driving better results in the first half of the year, despite above average industry natural catastrophe losses.

According to Aon data, property catastrophe capacity has grown steadily throughout the year; by the end of the second quarter of 2023, total global reinsurer capital had reached $620 billion – an increase of 10.7 percent over its decade-long low nine months earlier – principally driven by retained earnings, recovering asset values and new inflows to the insurance-linked securities (ILS) market.

The rebound in the ILS market in 2023 has seen it now contributing a record $100 billion in risk transfer capacity, thereby acting as a key supply-side driver in the property catastrophe space. Within the ILS sector, catastrophe bond issuance set a 1H record, having surpassed $10 billion, putting it on track to achieve record annual issuance by FY2023.

Andy Marcell, CEO of Aon’s Risk Capital and Reinsurance Solutions, said: “As market stability brings optimism, our focus this renewal season is on optimizing capital strategies by building stronger reinsurer collaborations, accessing diversified capital sources and driving differentiation for our clients. Using advanced data and analytics, we are helping our clients to optimize capital and develop their own unique view of risk, both of which will strengthen their position during renewals negotiations. At the same time, reinsurers and other capital providers should examine how they can best support insurers – in particular, those with high net retained losses, including revisiting aggregate products – and, in so doing, strengthen relationships for collective success.”

Aon’s Ultimate Guide to the Reinsurance Renewal highlights that a return to a more orderly and profitable market is an opportunity for reinsurers to focus on providing value to insurers, and for insurers to reward reinsurers that are “pragmatic, flexible and creative.” In addition, the renewals offer an opportunity for reinsurers to focus on certainty, working with insurers to better align cover across a program and provide more consistent terms and conditions.

Joe Monaghan, global growth leader for Aon’s Reinsurance Solutions, said: “Reinsurers and ILS investors are demonstrating increased appetite for segments of property catastrophe business – particularly for middle to upper layers – but the increasing impact of secondary perils, especially for cedents with higher catastrophe retentions post-Jan. 1, 2023, is a growing challenge that requires industry cooperation. Reinsurers that are collaborative, solution-oriented and client-focused will be more effective in executing their Jan. 1 renewal strategies than those attempting to deploy a broad-brush approach.”

To view Aon’s Ultimate Guide to the Reinsurance Renewal, please click here:

For more information about Aon’s Reinsurance Solutions, please visit:


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