
Report
Amidst a turbulent geopolitical climate, the insurance market at the start of 2025 has been a welcome source of stability. The devastating wildfires in California during the first weeks of the year have not diverted the insurance market from the positive trajectory set in motion during the second half of 2024. On the contrary, the insurance ecosystem has proved itself remarkably resilient, absorbing more than $37bn in losses from the Los Angeles wildfires without interruption to capacity or coverage.
While, as a whole, market conditions remained moderate in the first quarter of 2025, the softening trend accelerated for well-performing and preferred risk types, especially when supported by quality underwriting information. Wide portions of the market are now characterized by ample capacity, strong competition, and flat-to-modestly-down pricing, with some exceptions for highly volatile products, industries and geographies. Insurers are squarely focused on growth, but underwriting remains disciplined and selective.
The insurance industry at large is investing heavily in data and tools that help quantify and differentiate risks and that position risk managers and insurers alike to respond quickly to emerging trends. For example, we are seeing insurers continually adapting their appetite and pricing to reflect changes in loss and risk trends in automobile, U.S. casualty, and natural catastrophe-exposed property. We are also seeing an increase in the use of risk bursaries – allocating a portion of the insurance premium for risk improvement and related services – as risk managers seek cost-effective ways to strengthen their organizations’ resilience.
Today’s favorable market conditions present opportunities for risk managers to revisit their risk strategy – from exposure management and quantification to their risk financing approach – and evaluate the quality of their market relationships and resilience of their end-to-end risk program. Under competitive pressure, insurers are more flexible and willing to consider increasing policy limits to a degree, eliminating sub-limits, reducing deductibles, and expanding coverages. It is important to also bear in mind that we are now in a modern era ripe with non-traditional solutions – parametric, captives, facultative reinsurance, and custom policy wordings, to name a few – and now is an ideal time for risk managers to explore how to leverage these solutions to make their risk strategy more robust and future-proof.
While the insurance environment is largely buyer-friendly at present, we must not lose sight of the cyclical nature of insurance market cycles. Most of the current softening is due to insurers’ retained earnings from the recent profitable years. We have not seen an influx of new capital into the industry. The 2025 Atlantic hurricane season is still ahead of us, and further natural catastrophe losses may affect insurer growth appetite and positions in 2025. In addition to adverse claims trends already working their way through U.S. casualty and automobile lines, trade disputes and tariffs could have consequences for future claims inflation, with higher replacement and repair costs.
We are working with our clients to help them capitalize on short-term opportunities presented by current market conditions, while anticipating and positioning for the longer term. By leveraging both traditional and non-traditional solutions, securing long-term agreements, and helping clients invest in lasting insurer partnerships, we are driving greater certainty of price and coverage on behalf of our clients. In an increasingly volatile and complex risk landscape, we continue to remind our clients that opportunistic plays should be weighed against the benefits of strong relationships with trusted insurance partners. The importance of stability and certainty cannot be underestimated.
Report
Expand the options below to read a summary of how the insurance market trended in Q1 2025 across pricing, capacity, underwriting, limits, deductibles and coverages.
Pricing | Capacity | Underwriting | Limits | Deductibles | Coverages | |
---|---|---|---|---|---|---|
Asia | -1-10% | Abundant | Flexible | Flat | Flat | Stable |
EMEA | -1-10% | Ample | Prudent | Flat | Flat | Stable |
Latin America | Flat | Ample | Prudent | Flat | Flat | Stable |
North America | Flat | Ample | Prudent | Flat | Flat | Stable |
Pacific | -1-10% | Abundant | Flexible | Flat | Flat | Stable |
Overall, pricing in the quarter was generally moderate, but with a growing softening trend across wide swathes of the market. Cyber and directors and officers continued to enjoy favorable pricing in almost all markets, albeit with signs of moderation. Automobile pricing, however, continued to rise due to loss trends, and U.S. exposed casualty remains challenged. Property conditions were moderate: increasing capacity and insurer growth targets are resulting in discounts, especially for preferred risks supported by quality underwriting information, while geographies that have suffered large losses from extreme weather events, such as Canada and parts of Europe, Middle East and Latin America, experienced modest rate increases for natural catastrophe risks. The Los Angeles wildfires in January had little effect on property renewals. Japan is the geographic outlier, as insurers raised pricing across the board in a bid to improve profitability.
Capacity has been generally sufficient, and increasingly abundant in areas targeted for growth, such as cyber, directors and officers, preferred property risks and non-U.S. exposed casualty, with increased deployment from incumbent insurers and new market entrants and strong competition from international markets. Treaty reinsurance conditions remained favorable, and facultative reinsurance is helping fill local capacity gaps for large property risks, especially in Latin America. Some capacity constraints have continued, particularly for natural catastrophe and high-hazard property, automobile and U.S. casualty risks.
Underwriting has remained disciplined overall, although increasingly flexible where placements are subject to intense competition, typically in cyber, directors and officers and preferred property risks, especially where quality risk information is provided. Insurers are showing more willingness to quote risks they would not have previously considered. Underwriting remains rigorous on challenging risk types and lines of business, such as automobile, U.S. exposed and complex casualty, and some natural catastrophe property risks.
Adequate limits were available for the majority of risks, although challenging risk types remained under pressure. For highly competitive lines, namely cyber and directors and officers, many clients are opting to convert premium savings into higher limits, especially where limit reductions were imposed during the hard market.
Broadly, most placements are renewing with expiring deductible levels; however, lower deductible levels are available in many cases and insureds are increasingly opting to convert premium savings into deductible reductions. Higher deductibles are being required by insurers for certain lines, namely automobile, poor-performing property risks, and natural catastrophe exposures in some loss-impacted markets. In Japan, some insureds are raising property deductibles to help mitigate rate increases.
While most placements are renewing with expiring coverages, insurers are competing based on coverage terms - offering broader coverage to attract and retain business in the most competitive segments of the market, such as cyber and directors and officers. Ongoing political events remain a consideration; potential peace agreements in Ukraine and the Middle East could pave the way to the eventual removal of certain relevant coverage restrictions.
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Expand the options below to read a summary of how the insurance market trended in Q1 2025 across key lines of business, including Automobile, Casualty/Liability, Cyber, Directors & Officers and Property.
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
Asia | Moderate | Soft | Soft | Soft | Soft |
EMEA | Moderate | Moderate | Soft | Soft | Moderate |
Latin America | Moderate | Moderate | Soft | Soft | Moderate |
North America | Challenging | Moderate | Soft | Soft | Moderate |
Pacific | Moderate | Moderate | Soft | Soft | Soft |
Conditions have been moderate-to-challenging. Risks and geographies with adverse loss trends such as the U.S. and parts of Europe, continued to experience rate increases and rigorous underwriting; however, there has been a trend toward more favorable conditions in some markets as insurer appetite strengthens. In some cases, insurers have required higher deductibles and/or have imposed risk management controls such as telematics.
Conditions have been moderate overall, but increasingly favorable for non-U.S. exposed risks, driven by ample capacity and insurer appetite for growth. In the U.S., challenging conditions persist for excess liability, where some insurers are reducing limits or withdrawing. International casualty programs with significant U.S. exposure have also experienced capacity constraints, pricing pressures and coverage restrictions. PFAS, biometrics and wildfire are areas facing increased underwriting scrutiny, and in some cases exclusionary wording mandates.
Despite an increase in claims frequency and deteriorating prior year loss development, market conditions for cyber remain buyer friendly. Capacity is ample-to-abundant, resulting in modest rate reductions and broad coverage for many insureds. Underwriting has remained somewhat rigorous, with insurers emphasizing the importance of appropriate controls. Many insureds are using premium savings to increase or restore limits lost in the previous hard market. Aon continues to develop tools and facilities to drive innovation in coverage and provide access to capacity.
The directors and officers market has remained highly competitive, with continued rate reductions – albeit, decelerating from those seen in 2024 - and opportunities to secure higher limits and enhanced coverage. However, some challenges have continued. Insurers are watching macroeconomic trends closely, and a small number have exited the U.S. directors and officers market. Placements for companies in bankruptcy or financial distress, as well as cryptocurrency risk or certain ESG exposures, have faced a challenging market environment. Given the potential for market volatility, and current attractive premium rates, clients are shifting their focus toward stability and certainty, investing in long term insurer relationships.
Overall, the property market is moderate, but with accelerated softening for well-performing preferred risks. Increasing capacity and insurer growth ambitions have led to increased flexibility and pricing competition, double-digit rate reductions seen for the most sought-after risks. However, pockets of the market, especially large risks in geographies with a recent history of natural catastrophe losses, such as Canada, parts of Europe, the Middle East and Latin America, face capacity constraints and restrictions on terms, conditions and coverage. In Japan and India, property rates are under pressure as insurers look to improve underwriting profitability.
Q1 2025 saw continued claims related to the four mega trends impacting the risk environment, namely Trade, Technology, Weather and Workforce. Other key claims trends we observed in Q1 include:
We have seen positive momentum from insurers who are enhancing their client service commitments by tightening claims cycle times, especially on lower-value claims. In addition, insurers who have invested in improving their IT and data capabilities are now seeing the benefits and putting these tools to good use to improve the claims experience for clients. However, we have also experienced a continuing (and concerning) trend by some insurers to heavily rely on external legal counsel opinion prior to communicating with clients on mid-large claims. This move can cause clients to instruct their own lawyers, creating less open dialogue and transparency and elongating the lifespan of claim resolutions. Our experienced Aon claims teams can help navigate clients through these complex situations.
Climate change, and resulting natural catastrophes, is expected to continue to create volatility in terms of both societal disruption and economic impact, creating a knock-on effect to insurance claims. Putting the right business continuity plans in place ahead of natural disasters is assisting companies in getting back up and running as quickly as possible.
Adverse litigation trends, including the rise of class actions, mass torts, nuclear litigation verdicts, litigation funding, and a proactive plaintiff bar, combined with economic inflationary pressure, are expected to continue. While these matters are being aggressively managed on individual claims, an industry coalition comprised of brokers, insurers, clients, defense counsel and other stakeholders is collaborating more broadly to combat these litigation developments through strategic defenses and/or settlements.
As a society, we have become ever-more dependent on our IT infrastructures and sharing data when transacting for goods and services. With this comes an associated risk of cyber-attacks and data breaches stemming from myriad factors including software vulnerabilities, compromised credentials, social engineering, and the interdependence of organizations sharing data. We continue to work with Aon clients to ensure they have robust IT infrastructures, proper controls, and cyber claims training in place – urging them to partner with insurers who offer comprehensive cyber coverage and cyber claims subject matter expertise.
We are encouraging clients to take advantage of the softening market by reviewing their approaches to risk mitigation and claims. Now is the time for clients to evaluate their insurer partners not only on placement outcomes but also on their claims paying track record, transparent communication during the claims process, engagement with Aon claims and broking professionals on behalf of the client, and commitment to improving the client claims journey.
Expand the options below to read a summary of regional insurance market trends from Q1 2025.
For more detailed analysis, download and read the full report here.
Overall | Pricing | Capacity | Underwriting | Limits | Deductibles | Coverages | |
---|---|---|---|---|---|---|---|
Asia | Soft | -1-10% | Abundant | Flexible | Flat | Flat | Stable |
China | Soft | -1-10% | Abundant | Prudent | Flat | Flat | Stable |
Hong Kong | Soft | -1-10% | Ample | Prudent | Flat | Flat | Stable |
India | Moderate | +1-10% | Abundant | Flexible | Increased | Flat | Broader |
Japan | Challenging | +1-10% | Constrained | Rigorous | Decreased | Flat | Stable |
Korea | Soft | -1-10% | Abundant | Flexible | Flat | Flat | Stable |
Singapore | Soft | -1-10% | Ample | Prudent | Flat | Flat | Stable |
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
Asia | Moderate | Soft | Soft | Soft | Soft |
China | Moderate | Soft | Moderate | Soft | Soft |
Hong Kong | Soft | Soft | Soft | Soft | Soft |
India | Moderate | Soft | Moderate | Soft | Challenging |
Japan | Moderate | Challenging | Challenging | Moderate | Challenging |
Korea | Moderate | Soft | Moderate | Soft | Soft |
Singapore | Moderate | Soft | Soft | Soft | Soft |
Overall | Pricing | Capacity | Underwriting | Limits | Deductibles | Coverages | |
---|---|---|---|---|---|---|---|
EMEA | Moderate | -1-10% | Ample | Prudent | Flat | Flat | Stable |
D-A-CH | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
France | Moderate | Flat | Abundant | Prudent | Flat | Flat | Stable |
Iberia | Soft | -1-10% | Abundant | Flexible | Increased | Flat | Stable |
Italy | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
Middle East | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
Netherlands | Moderate | Flat | Abundant | Flexible | Increased | Flat | Stable |
Nordics | Moderate | -1-10% | Abundant | Prudent | Flat | Flat | Stable |
South Africa | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
Turkey | Soft | -1-10% | Ample | Prudent | Flat | Flat | Stable |
United Kingdom | Soft | -11-20% | Abundant | Flexible | Increased | Flat | Stable |
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
EMEA | Moderate | Moderate | Soft | Soft | Moderate |
D-A-CH | Challenging | Moderate | Soft | Soft | Moderate |
France | Challenging | Moderate | Soft | Soft | Moderate |
Iberia | Challenging | Soft | Soft | Soft | Soft |
Italy | Challenging | Soft | Moderate | Soft | Moderate |
Middle East | Moderate | Moderate | Soft | Soft | Challenging |
Netherlands | Moderate | Moderate | Soft | Moderate | Moderate |
Nordics | Not Applicable | Moderate | Soft | Soft | Moderate |
South Africa | Moderate | Moderate | Soft | Moderate | Moderate |
Turkey | Soft | Moderate | Soft | Soft | Moderate |
United Kingdom | Moderate | Soft | Soft | Soft | Soft |
Overall | Pricing | Capacity | Underwriting | Limits | Deductibles | Coverages | |
---|---|---|---|---|---|---|---|
Latin America | Soft | Flat | Ample | Prudent | Flat | Flat | Stable |
Argentina | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
Brazil | Soft | -1-10% | Abundant | Prudent | Flat | Flat | Stable |
Chile | Soft | -1-10% | Ample | Prudent | Flat | Flat | Stable |
Colombia | Soft | -1-10% | Ample | Prudent | Flat | Flat | Stable |
Mexico | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
Latin America | Moderate | Moderate | Soft | Soft | Moderate |
Argentina | Moderate | Moderate | Soft | Soft | Moderate |
Brazil | Soft | Soft | Soft | Soft | Moderate |
Chile | Moderate | Soft | Soft | Soft | Moderate |
Colombia | Soft | Moderate | Soft | Soft | Moderate |
Mexico | Moderate | Moderate | Soft | Soft | Moderate |
Overall | Pricing | Capacity | Underwriting | Limits | Deductibles | Coverages | |
---|---|---|---|---|---|---|---|
North America | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
Canada | Soft | -1-10% | Abundant | Prudent | Flat | Flat | Stable |
United States | Moderate | Flat | Ample | Prudent | Flat | Flat | Stable |
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
North America | Challenging | Moderate | Soft | Soft | Moderate |
Canada | Moderate | Soft | Soft | Soft | Soft |
United States | Challenging | Moderate | Soft | Soft | Moderate |
Overall | Pricing | Capacity | Underwriting | Limits | Deductibles | Coverages | |
---|---|---|---|---|---|---|---|
Pacific | Soft | -1-10% | Abundant | Flexible | Flat | Flat | Stable |
Australia | Soft | -1-10% | Abundant | Flexible | Flat | Flat | Stable |
New Zealand | Moderate | Flat | Abundant | Prudent | Flat | Flat | Stable |
Automobile | Casualty/Liability | Cyber | Directors & Officers | Property | |
---|---|---|---|---|---|
Pacific | Moderate | Moderate | Soft | Soft | Soft |
Australia | Moderate | Moderate | Soft | Soft | Soft |
New Zealand | Moderate | Moderate | Soft | Moderate | Moderate |
To see our full analysis of regional and country level insurance market conditions, download the report here.
Report
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