Organisations facing increasing property program volatility can benefit from alternative risk transfer strategies, unlocking access to strategic sources of capital and supporting long-term program stability, according to Aon.
The long-term view of property risk is increasingly volatile and complex. Risk buyers are currently navigating two opposing dynamics in the global property insurance market: pricing conditions continue to ease, while the growing frequency of natural catastrophes has the potential to shift the market toward harder conditions, especially if a major event occurs.
“The long-term trajectory of property risk is complex,” says Ryan Barber, Global Head of Property at Aon. “Heightened climate risk, increasing replacement costs and demographic shifts to cat-prone areas are putting more pressure on the market. This is a very favorable trading window for businesses to take a long-term view and future-proof their programs.”
In a recent article, Aon noted that a risk capital approach can help diversify exposures and enhance resilience, allowing organisations to make the most of favourable market conditions.
A risk capital strategy combines traditional risk transfer with alternatives such as reinsurance, structured solutions, parametrics, captives, and insurance-linked securities. These methods give companies direct access to capital, enabling cost savings and tailored risk management that balances risk transfer, retention, and alternative solutions.
As alternative capital sources continue to expand, they are driving more efficient and dynamic risk management solutions by moving closer to the underlying risks.
Barber added, “Traditional forms of risk transfer can no longer solely address the wide variety of risks across an organization. Alternative risk transfer solutions address exposures that were previously retained and also unlock capital.”
Aon highlighted that the current buyer-friendly market provides an opportunity for businesses to view risk management as a strategic asset that enhances long-term business value. Accrued cost savings can strengthen corporate risk strategies and support sustainable growth.
Toby Owen, Executive Director, International Property, Europe, Middle East, Africa and Asia, said, “If you are trying to use non-traditional solutions to enhance your portfolio, the soft market is a perfect time to do that. Traditional underwriters are much more flexible and willing to allow changes to the portfolio. It’s a great opportunity to experiment.”
Aon outlined four alternative risk transfer methods — parametric risk transfer, captives, facultative reinsurance, and structured solutions — which businesses can use to directly access capital tailored to their risk appetite.
“If you’re not making changes in the soft market, you are exposing your program to volatility if the market goes the other way,” says Michael Gruetzmacher, Head of Alternative Risk Transfer in North America at Aon. “So now is the time to think about taking a portion of your shared and layered program and making it a multi-year program.”
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