The insurance industry is feeling more pressure for aggregate coverage, as the markets pull back from secondary perils such as wildfires, floods and convective storms, an Aon executive has said.

“Many insurers have raised their attachment points, the threshold for payout,” said Andy Marcell, Aon chief executive of global solutions, speaking at the PwC Summit.

“Clients are now taking on a disproportionate amount of loss because it is not being passed on to insurers,” he told an audience at the Hamilton Princess & Beach Club. “Clients are now looking to us for other forms of capital to smooth out their earnings.”

In previous years secondary perils such as wildfires, were considered a lesser risk compared to catastrophic events such as hurricanes.

Secondary perils have now become so powerful, some people have questioned if they should still be called “secondary”.

In 2024, this type of risk accounted for 65 per cent of global insured losses, and was this year expected to reach $140 billion in losses.

S&P Global has reported that the top 19 reinsurers have more than halved their exposure to insured catastrophe losses in the last five years to reduce their volatility. The credit ratings agency said they will likely continue to bear a smaller burden than they have historically.

Only a quarter of structural losses from January’s California wildfires are thought to have been covered by insurance.

Mr Marcell said some insurers are having their best third quarter ever, but warned them against complacency.

“This is a trading window,” he said. “Inevitably, the rate is going to go up again.”

He predicted the market would see elevated risk and increased frequency and severity of reinsurance losses.

“Climate change is not going away or easing up any time soon,” he said. “It happens in an uneven way because it is like an act of God.”

However, panellist Paul Simons, CEO of Convex Re disagreed with Mr Marcell’s claims that the markets had run away from secondary peril.

“We are not paying out for events that we should not be,” Mr Simons said.

Mr Marcell stuck to his guns, saying the idea that reinsurers were not avoiding secondary peril was “simply not accurate”.