‘Soft Market Under Stress’ Offers Unique Window of Opportunity for Insurance Buyers

A buyer-friendly competitive commercial insurance market is likely to be short-lived, according to a new analysis of second-quarter 2025 market conditions from global professional services firm Aon.

“This is not a typical soft market cycle; it’s a soft market under stress,” declared Joe Peiser, CEO of Commercial Risk for Aon, in a media statement about a new Aon report, “Q2 2025 Global Insurance Market Insights.”

While capacity is expanding and pricing softening across many lines of business, systemic threats are intensifying at the same time, he said, noting the forces of geopolitical instability, climate volatility, cyber fragility, infrastructure vulnerability, and supply chain disruption that threaten to close the “unique, though perhaps temporary, window of opportunity of insurance buyers.”

In spite of current softness, U.S. casualty, property and cyber lines are showing ongoing deterioration in underlying loss activity, Aon said, also noting a “fairly limited influx of new capital” as a pressure point that could quickly close the “strategic window” of opportunity for buyers.

“Large or surprising loss events, in tandem with geopolitical or financial market volatility, could affect a rapid change in insurer appetite for certain risks,” the report says.

“That means organizations need to think and act strategically — leveraging favorable conditions to strengthen their programs, optimize capital and build resilience for what comes next,” Peiser said. He also suggested that buyers should adopt a “total cost of risk mindset” instead of engaging in “transactional buying”—asserting that the shift will provide great confidence to navigate volatility over the long term.

Buying Opportunities

The report included separate sections summarizing market conditions in Asia, EMEA, Latin America, North America and the Pacific regions, providing insights on pricing, capacity, underwriting, limits, deductibles and coverages. Also provided are product trends for automobile, casualty, cyber, directors and officers liability and property insurance products.

On a graphic summarizing trends for each region/product combination, only auto in North America and EMEA appear in red indicating “challenging” markets for buyers. “Moderate” conditions are indicated in auto in the Asia and Pacific regions and in casualty lines in EMEA, Latin America and North America (shown in orange).

Across the rest of the chart, a sea of green indicates a soft market in the other lines (cyber, D&O and property) across all regions, as well as in casualty/Asia, casualty/Pacific and auto/Latin America.

Generally the report offers these insights:

• Property pricing continues to improve with shared-and-layered programs showing the largest price decreases and most U.S. placements experiencing double-digit rate reductions. There is also more flexibility around coverage and terms, as well as increasing appetite for natural catastrophe risks. The California wildfires and severe convective storm events at the start of this year have not caused significant market dislocation.
• Cyber and directors and officers (D&O) markets remain soft, with rate drops in the single-digit to low double-digit range. In these lines, some clients are securing higher limits or improved terms at no additional cost.
• U.S. casualty and automobile remain challenging as a result of adverse claims trends, “but capacity continues to be broadly responsive to demand, and options are available to buyers, albeit at higher rates and attachment points.”

North America vs. the World

Averaging prices across all lines included in the analysis, Aon estimates price drops of 1-10% in Asia, EMEA and Latin America, and 11-20% in the Pacific, while pricing stayed flat, on average, in North America.

Aon also said coverages were stable, and limits and deductibles flat in North America where Aon brokers characterized underwriting as “prudent” and capacity “ample.”

Aon also described underwriting as “prudent” in the EMEA region, while other regions saw “flexible” underwriting, higher limits and “abundant” capacity.

In property lines in the U.S., softening conditions are accelerating despite the California wildfires in January, with double-digit price reductions on average.

While natural catastrophe losses remain a key concern, overall availability of capacity and competitive pressures are helping to offset loss challenges.

In U.S. auto, however, underwriting scrutiny is intense, with insurers requesting detailed information on fleet safety, risk mitigation and contract requirements, especially for larger and non-owned fleets. Here, Aon sees clients exploring alternative risk solutions, captives and increased risk retentions to mitigate price increases.

In contrast, abundant capacity in the cyber insurance market in North America is keeping market conditions soft, despite an increase in claims frequency and poor loss development on prior year claims. In the cyber world, Aon sees insureds using premium savings to buy more limit.

While the North America market remains competitive for D&O, rate reductions in both primary and excess layers have been decelerating as insurers turn their attention to the need for sustainable pricing, according to the report.

“This shift is happening quickly for large public companies and financial institutions.”

In addition, “a small number of insurers have exited the U.S. directors and officers market recently,” the report says, without identifying the insurers but noting that Aon is monitoring this development.

(Editor’s note: Markel Insurance exited some risk managed or large cap executive assurance D&O business in February and took a prior-year reserve charge for the runoff book in the second quarter, the company announced earlier this week.)

This article first was published in Insurance Journal’s sister publication, Carrier Management.

Topics Pricing Trends Market