Your guide to the insurance market and how it affects your business.
Insurance market softens
Clients welcomed the news that the increasingly favourable business insurance market conditions enjoyed during the first half of 2025 had continued – and, in some cases, accelerated – in H2. Pricing and terms for key commercial insurance lines continued to improve, with the expectation the current conditions will prevail, at least in the short-term.
Rates across property and financial lines continued to soften, and liability lines began to follow suit, bringing further reprieve for clients who had endured several years of significant premium rises and challenging conditions.
Insurers continued to pursue growth within their portfolios, while new entrants to the market further boosted competition. As a result, there was greater capacity for clients with quality risks and better pricing for hard-to-place risks. Improved capacity also enabled stable pricing across most insurance classes.
The mid-year reinsurance renewal period saw stable catastrophe pricing and broader capacity. Market conditions shifted in favour of buyers amidst increasing competition and surplus capacity. This flowed through to the commercial insurance market, keeping pricing and structures steady, though some differentiation occurred based on individual risk profiles and loss histories. Consequently, the majority of placements, particularly non-complex and mid-market risks, continued to see a softening of terms and conditions, added capacity, more flexibility, and an overall reduction in premium pricing.
The increasingly competitive market enabled many clients to negotiate better terms, enhance coverage, and explore alternative risk financing strategies including self-insurance and captives. Continued interest in parametric insurance solutions was also evident as clients looked to build insurance programs to suit their risk, including how their program was structured.
Despite the emergence of competitive pricing and improved terms, the softening market conditions were set against a background of volatile micro- and macro-economic conditions and wider global pressures including:
- geopolitical instability (including trade tensions and reciprocal tariffs)
- inflation (core and social)
- interest rate movements
- capital market volatility
- economic growth (set to weaken to an average annual rate of 2.9%, globally)
- supply chain disruptions
- infrastructure vulnerabilities
- labour shortages, including specialist skills in some areas
- extreme weather events (global NatCat insured losses in H1 2025 exceeded US$80 billion)
- cost of reinsurance
- challenging claims environment
- increasing frequency and severity of cyberattacks
- emerging risks from the rapid adoption of artificial intelligence (AI)
- ESG concerns
- tightening regulatory landscape, and
- global conflicts (including the Russia–Ukraine war, unrest in the Middle East, and Israel–Hamas war).
Although economic and geopolitical volatility are expected to continue to influence the insurance market, and notwithstanding any major upset, there is cause for measured confidence that the overall commercial insurance market will remain soft and conditions favourable for many clients.
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