A new report from professional services firm Aon reveals the global re/insurance industry delivered its strongest financial performance since 2006 this year, even as premium growth begins to slow.
The study, called the Profitable Growth research, analyzed a decade of data from 120 major companies. These firms represent nearly $2 trillion in gross written premiums. The goal was to identify which companies successfully grew their profits consistently through both soft and hard market conditions between 2013 and 2024.
Key Findings on Profit and Growth
The results show a significant jump in profitability. The group’s average return on equity hit 14.7% in 2024. This is a major increase from the 8.7% average return seen over the previous ten years.
This profit surge was driven by improved underwriting. The industry’s combined operating ratio—a key measure of profitability where a figure below 100% indicates a profit—fell to 93.6%. This is the best result in 18 years.
Meanwhile, total premiums grew by 7.5% in 2024 to $1.9 trillion. However, this marks the third year in a row that growth has slowed. It peaked at 10.2% in 2021.
Specialization and Diversification Lead to Success
The report found a clear divide between different types of insurers. For the third consecutive year, the most profitable companies were those with highly specialized operations or globally diversified portfolios. This was true for both insurers and reinsurers.
This high profitability occurred despite significant natural catastrophe losses. Re/insurers paid out $58 billion for natural disasters in the first half of 2024. This is well above the ten-year average of $47 billion. Yet, reinsurers still posted an impressive 17.6% return on equity.
A Call for a New Strategy
Sherif Zakhary, CEO of Aon’s Strategy and Technology Group, commented on the findings. He said insurers must evolve from simply selling products to becoming “performance partners” for their clients.
This means being more proactive and using data to deeply understand client needs across different regions and sectors.
Based on its research, Aon advises clients to focus on five key strategies:
- Redefining their growth plan.
- Aligning their capital with that strategy.
- Investing in data-driven decisions.
- Better understanding client and channel needs.
- Rethinking their talent strategy for future challenges.
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