What will be the key topics under discussion with clients at SIRC this year? Have the market challenges that were experienced earlier in the year started to abate?
The challenges are abating and it is quite a positive picture. Pricing and retention levels in Asia Pacific continued to experience challenging renewals through to mid-year this year, and there was a continued focus on pricing retention level adjustments during that period, but as we went through the year, the renewals became more orderly. As we move into the next set of renewals, particularly in the APAC region, we expect it to be more orderly again.
The markets are also in a more sustainable position now and capacity has grown steadily over the course of this year. We have also seen some new capital come into the market and supply and demand is largely in balance.
Rate adequacy for property is also in a good position globally, and in the APAC region. We have also benefited from strong investment results and all of that has led to reinsurers having a pretty robust first half of the year.
The discussions will be focused on structuring, pricing and retention levels going into 1.1, but we do we do expect it to be more orderly on the property side.
In the APAC region, proportional capacity will continue to be closely looked at in terms of how it has been deployed. There have been adjustments over the last couple of renewals around condition levels and event limits and, in some cases, we've seen loss participation clauses being introduced, so there'll be a continued focus on the proportional capacity.
Social inflation in the US is another topic we’ll be discussing. It's something that we're keeping an eye on in the region. But overall it is a positive picture and we’re not expecting to much contention around the renewal of casualty treaties.
How significant are the January 1st renewals in Asia Pacific compared to the other renewals periods?
1.1 is dominated by Southeast Asia, Korea and Greater China. This is one of the key renewals for the for Asia and China.
Is inflation under control in general in Asia Pacific, and how will it be addresses in renewals discussions?
Inflation levels across Asia Pacific are relatively low and moderate compared to some of the other major regions globally. However, core inflation has been persistent and in many circumstances is still above the central bank targets in many of the Asian countries, but we expect it to moderate in 2024. The key for Aon is working with our clients to help them articulate how they're managing inflation through their portfolios when engaging reinsurers in renewal discussions.
What are the tools and services that Aon will bring to bear to ensure a successful renewal for clients?
Going back to the earlier point around pricing and retention levels we are preparing our clients for pricing to moderate, but also ensuring they are clear that this doesn’t mean softening or hardening, just moderating.
One of the key challenges is managing higher retained volatility. We’re bringing all our capability together in terms of helping our clients to manage that and the capital implications it causes. We also guide them on how rating agencies and regulators view increased retention levels.
Aon adds value by working with clients to optimise portfolios in terms of pricing and underwriting to manage that retained volatility and explore risk management to mitigate potential challenges. As part of that, we can leverage our data capabilities and analytical insight to help tour clients with catastrophe modelling, to help them understand volatility, and structure and optimise reinsurance.
We also have broader capability in terms of helping our clients from consulting and advisory perspective around growth strategies, driving operational efficiency, and looking at talent. Additionally, we offer support through our advanced technology suite, part of our strategy and technology group, which covers pricing, underwriting, reserving portfolio management, and capital modelling.
Will 2024 be a year of volatility, stability, or growth?
A bit of everything! In terms of the renewal we’ll see a more orderly, more stable environment. However, looking at the broader macroeconomic environment and geopolitics, clearly, there's continued volatility there with the ongoing Russian invasion of Ukraine and the more recent Hamas/Israel conflict.
Despite that uncertainty, many clients are looking to grow and that can mean expanding into new lines. We can help them in terms of identifying growth strategies, whether that's market insight, product development, taking new products to market, or by bringing them capital to support that growth.
We've got a strong team with 530 people and 17 offices and are always looking at ways to further build it out and support our clients in the region.