The energy crisis in South Africa, tough January reinsurance treaty renewals, adverse weather conditions and the geopolitical events in Europe are just some of the market events and factors that are unpacked in the latest Aon Insurance State of the Market 2023 report, which takes a deep dive into how these events are impacting insurance markets across Property and Casualty; Riot, Strikes and Terrorism; Motor; Cyber and Errors & Omissions (E&O). 

“These insurance markets have been heavily impacted by three overarching local and global events in the form of South Africa’s ongoing energy crisis, the far-reaching impact that natural catastrophes are having both locally and globally, as well as rising geopolitical tensions including the Russia-Ukraine war, through to South Africa’s looming 2024 elections,” explains Alicia Goosen, chief broking officer at Aon South Africa.

“These were all reflected in the January 2023 reinsurance renewals which marked a turning point for the reinsurance market, signalling a new and tougher reality for insurance buyers. It was the most challenging January renewal in a generation, as the reinsurance market underwent fundamental shifts in pricing and risk appetite, especially for property catastrophe risk,” says Alicia.

“The bottom line is that in a world of growing volatility, these interdependent economic and geopolitical factors will without doubt have a significant impact on business risk profiles, and market conditions will demand an evolution of risk strategy and transfer objectives. it is highly pertinent for business leaders and risk managers to challenge and re-set their risk tolerance, appetite and strategy, and to align risk management programs accordingly.  The Aon Insurance State of the Market 2023 report, provides insights into the key factors driving the insurance markers, what this means for insurance buyers, and what the solutions are – both existing as well as new - to realigning their risk management strategies to ensure that they are fit for a radically changed risk environment,” she adds.

In the report, Aon provides insights into how to leverage solutions such as data-driven decision frameworks, risk transfer capacity, and innovative concepts like parametric insurance, a solution that deconstructs traditional risk transfer by unlocking capacity via an independent event-based trigger, suitable when 3rd party data sources exist that can serve as a proxy for a risk event. With this solution in place, when the event occurs, the independent data responds, triggering the policy, giving the insured quick access to capital. Parametric solutions are particularly well suited for risks associated with natural catastrophe and weather perils, but innovations in this space are expanding these concepts into new areas.

For insights about the specific risk factors affecting the South African insurance market and potential solutions, download Aon’s Insurance State of the Market 2023 full report HERE.

About Aon

Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Our colleagues provide our clients in over 120 countries and sovereignties with advice and solutions that give them the clarity and confidence to make better decisions to protect and grow their business. 

Follow Aon on LinkedIn, Twitter,Facebookand Instagram. Stay up-to-date by visiting the Aon Newsroomand sign up for News Alerts here.