Beyond the cycle: match risk to capital – and innovate, urges Aon

For all the optimism around softer property terms, Monte Carlo also reminds us that the market is split. Property buyers sense momentum shifting in their favour; reinsurers, particularly in casualty, are cautious, but optimistic. 

Key points:
Technology helping to match risk with capital
Reinsurers can drive innovative structures
Embrace data-driven solutions

Into that mix, Amanda Lyons and Tracy Hatlestad, global product and property leaders respectively for Aon’s Reinsurance Solutions, argue that the real story is not the cycle itself, but how risk and capital are being matched more creatively.

“Reinsurers are optimistic about the front-end pricing in casualty, but still cautious about whether they have seen the last of the adverse development,” Lyons told Monte Carlo Today.

On property, Hatlestad sees momentum shifting toward buyers. “Market dynamics are now moving in favour of buyers, and we expect that terms, conditions and pricing will further move in their favour at the 1/1 renewals,” she said.

After the January wildfires, catastrophe activity has been relatively contained, leaving reinsurers’ balance sheets intact. Earnings have held up, capital has returned – not least via the insurance-linked securities (ILS) sector – and demand from cedants for reinsurance is expected to rise by mid-single digits in 2026. But Hatlestad is confident the market can absorb it.

Casualty optimism 

The story is more complex in casualty, where Lyons said little has changed since mid-year. Primary rates are on the rise , but claims inflation, litigation funding, and a continued increase in lawsuits are keeping reinsurers on edge. “It feels as though the adverse development we’ve seen over the past 18 months or so is slowing,” she explains.

“I do sense that will be a big topic at Monte Carlo – discussions around how the industry can address areas such as legal system abuse and advocate for tort reform where it’s needed to drive real, substantial change.”

Hatlestad:“We expect that terms, conditions and pricing will further move in buyers’ favour at the 1/1 renewals”

That dual focus of opportunity on one side, and caution on the other, runs through Aon’s message at this year’s Rendez-Vous. For Hatlestad, the property sector’s ability to harness technology is central. “We recently published our Global Catastrophe Risk Management Survey, and it was interesting to see the variety of ways insurers are engaging with technology,” she explained. 

For Aon, this crystallises where it can add the most value, whether through data augmentation to support exposure capture, or using claims information to build customised views of risk for insurers. “The technology available now makes this more robust and sophisticated than in the past, and we are investing heavily in that space.”

Hatlestad pointed to Aon’s Event Analytics solution, which launches during Monte Carlo, as an example. “It will include exposure and real-time loss information in a more seamless way than in the past and brings together the component parts of catastrophe risk analysis that clients value most into a single platform. It also builds on data partnerships, satellite data and AI capabilities.”

Innovation in focus

Aon’s leadership is insistent on innovation. Lyons highlighted how record levels of capital were helping to fuel innovation. “Cyber is a great example. Clients with well-performing portfolios were struggling with attachment points and concerns over basis risk around event-based products. There has always been an issue around defining an event. 

“So, we worked with creative reinsurers to develop a product that allows clients to recover losses within a time period where there’s an influx of claims, thus removing the issues around event definition. Clients are really excited about that kind of innovation.”

She also highlighted work on a named-peril casualty product targeting emerging risks such as PFAS, microplastics and climate litigation. “The tools and data are getting better, so clients can at last monitor those exposures in their books. The natural next step is to use reinsurance as a tool to manage them.” New research from Aon and Moody’s shows how responding to customer need has the potential to create a reinsurance casualty cat market of ~$5 billion annual premiums for re/insurers that want to boost relevance and drive profitable growth.

Both leaders stressed that Monte Carlo provides the perfect platform to test appetite for such innovation, and Hatlestad argued that for this year in particular, clients should consider starting from scratch on their structures and look at products beyond traditional occurrence protection.

Lyons:“If both sides are open to creative conversations about how we can match risk to capital, it makes for a much more successful renewal season”

“We’ve seen success matching risk and capital for solutions such as catastrophe aggregates that had largely gone away during the peak of the hard market. Those are coming back and are now being executed more successfully. I expect that to continue into 2026.” She urged clients to “go out and get them priced” even if they need to make some adjustments. “I think they’ll be pleased with some responses.”

Lyons agreed, noting creativity and openness would be decisive. “Monte Carlo is about pushing reinsurers on their appetite for these products. There’s still time left before year-end renewals, and lots could happen. If both sides are open to creative conversations about how we can match risk to capital, it makes for a much more successful renewal season.”

The common thread is the increasing importance of good data in unlocking product innovation and structuring solutions, enabling reinsurers to price with greater certainty.

Lyons concluded that the dialogue at Monte Carlo must balance realism with ambition: “There’s still uncertainty, but we can’t let that stop innovation.”

As Monte Carlo opens, Aon’s leadership is setting out a vision where data, creativity and capital combine to shape the next stage of the cycle. Buyers may find favourable conditions in property; reinsurers may remain cautious in casualty. Lyons and Hatlestad believe the answers lie not in retrenchment, but in innovation and a willingness to rebuild structures from the ground up.

Amanda Lyons is chief executive officer of Aon’s Reinsurance Solutions in Bermuda, and its global product leader. She can be reached at: amanda.lyons@aon.com

Tracy Hatlestad is global property segment leader at Aon’s Reinsurance Solutions. She can be reached at: tracy.hatlestad@aon.com

For more news from Monte Carlo Today, click here.

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