Aon, the global insurance and reinsurance broking group, has disclosed that the insurance industry was buyer-friendly throughout the first quarter of 2025, providing much-needed stability.
The broker explained that the moderate market conditions in the quarter, especially softening, accelerated for well-performing and preferred risk types, because of support from quality underwriting information.
Aon said, “Wide portions of the market are now characterised 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.”
However, the broker has disclosed that automobile and US casualty exposed risks continued to experience challenging market conditions as insurers respond to ongoing adverse loss trends.
Aon explained that insurers are continually adapting their appetite and pricing to reflect changes in loss and risk trends in automobile, US casualty, and natural catastrophe-exposed property.
There is 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 organisations’ resilience.
Despite overall stability, natural catastrophes exposed property risks in areas with extreme weather events in 2024, such as Canada and the United Arab Emirates, which experienced challenging conditions, with sub-limits and increased deductible levels now common.
Another trend to note is that as insureds look to future-proof their programmes against traditional market cycles, their interest continues to grow in alternative risk transfer, parametrics, captives, and long-term agreements that lock in current rates.
Joe Peiser, Chief Executive Officer, Commercial Risk Solutions, commented, “Amidst a turbulent geopolitical climate, the insurance market at the start of 2025 has been a welcome source of stability.”
These turbulences and devastating wildfires in California during the first quarter have not diverted the market from the positive trajectory set in motion during H2’24. On the contrary, the industry has shown its resilience by absorbing more than $37 billion in losses from the Los Angeles wildfires without interruption to capacity or coverage, notes the broker.
Aon explained that 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. Despite the forward momentum, Aon warns that the industry should 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, without any new influx of capital into the industry.
The 2025 Atlantic hurricane season is fast approaching, 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 US casualty and automobile lines, trade disputes and tariffs could have consequences for future claims inflation, with higher replacement and repair costs, explained Aon.
Aon backs leveraging both traditional and non-traditional solutions, securing long-term agreements, and is helping its clients invest in lasting insurer partnerships.
The broker added, “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.”
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