Global insurance market drifting into a progressively softer setting, with pricing momentum slipping across most European and US P&C insurance lines, according to Autonomous report. Analysts stop short of calling it a full soft cycle.
Only the UK and Ireland hit that stage, while other regions hover in stable or mildly cooling territory after several years of brutal hard markets.
According to Beinsure, insurance pricing still supports measured growth for European insurers, even if the mood feels twitchy.
Key highlights
- Autonomous flags weakening momentum across Europe and the US. The UK and Ireland remain the only fully soft region, with Axa and Allianz recording price drops not seen in years.
- Marsh reports a 3% global decline in 2025, driven by insurer competition. The Pacific and UK post the steepest drops at -8% and -6%.
- Fixed income still rules portfolios, but rate swings, inverted curves and liquidity pressure from surrender spikes complicate everything. CRE exposure stays modest but still monitored via stress tests.
- AI adoption raises model risk and governance questions. Alternative assets and complex cross-border reinsurance fuel worries about liquidity, valuation and concentration.
- Swiss Re data shows $80 bn in insured losses in the half of 2025 alone. Wildfire behaviour shifts, seasons lengthen and loss predictability weakens.
Supervisors track AI risks, rising alternative-asset allocations and growing cross-border reinsurance as liquidity, valuation and concentration risks climb.
Global commercial insurance rates declined by 3% in 2025, the third consecutive decrease in the composite rate following seven years of increases, according to the Marsh.
A continuing increase in insurer competition was the main catalyst behind rate trends, which declined globally in every region and across all major product lines other than casualty.
The UK and the Pacific regions experienced the largest composite rate decreases, at -6% and -8%, respectively, while US rates declined 1%.
Global commercial insurance rates dropped 2% in Q4 2024, marking the second straight quarterly decline after seven years of increases.
Global insurers face rate volatility
Fixed income still anchors most insurers’ portfolios, with capital flowing into high-grade paper even when markets feel jittery, according to IAIS report.
Interest rate swings push volatility straight into balance sheets and the inverted curve keeps spooking teams with long liability tails. Life insurers feel this the most, a reminder that solid ALM isn’t optional, it’s survival.
CRE exposure stays modest overall, usually below 5% of total investments across sectors and regions. A few insurers nudged allocations higher, which drags in both direct risks like defaults and impairments and indirect risks if the broader CRE market turns south and knocks banking stability.
Supervisors have stepped up stress tests and thematic reviews to keep those positions from drifting into dangerous territory.
Higher rates can also push policyholders to dump life contracts with investment guarantees. They chase better yields elsewhere, which strains liquidity for insurers stuck honouring those guarantees.
Supervisors now monitor surrender spikes and liquidity positions more aggressively, mixing off-site checks with on-site reviews. Insurers respond by tightening liquidity practices, adjusting credited rates and rolling out customer-retention tactics that sometimes feel a bit patched together.
Derivatives remain a standard hedging tool
Interest rate derivatives sit at the top of the stack, followed by FX and equity-linked contracts. Margin calls tied to these trades can blow up liquidity, especially when markets swing fast.
Supervisors track exposures, collateral demands and potential margin calls to make sure firms don’t get blindsided.
Geopolitical risk keeps rising with a kind of twitchy unpredictability
These shocks move through several channels. Markets can whipsaw, dragging investment returns, liquidity and solvency with them.
Cyber risks spike, disrupting operations and customer access. Claims rise for non-life carriers, driven by inflation and messy economic fallout, forcing pricing adjustments that nobody enjoys explaining.
And households under pressure cut spending, lapse more frequently and buy fewer policies. Supervisors now push insurers to map these transmission channels, fold them into stress tests and prepare contingency funding plans that might need to activate on short notice.
Rising insurance gaps alarm wealthy clients with cyber, NatCat and lawsuit risks. Insurance once felt simple for affluent families. Now it’s a maze of digital, climate and legal threats that outpace the insurance coverage many believe they already bought.
Total insurance assets
Total insurance liabilities
According to PRMA, the modern risk map sprawls far beyond property. Wealthy clients think about market swings, global instability, cyber intrusions, extreme weather, and the financial fallout of lawsuits, often all at once.
AI risks, alternative assets and cross-border reinsurance
Digitalisation and AI systems promise faster workflows, lower costs and smoother customer journeys, though supervisors keep spotting new pressure points.
Easier policy surrenders can ramp up liquidity strain, and AI-driven underwriting or investment tools may introduce fresh cyber and model-risk headaches.
Regulators respond by tightening engagement with insurers, reviewing governance setups, running risk surveys, sketching compliance rules for AI and machine learning and issuing guidelines built around policyholder rights. Most scrutiny lands on non-life players because their AI adoption runs ahead of life insurers.
The structural changes shaping life insurance
Another theme sits in the structural changes shaping life insurance. Two shifts dominate according to our analysts.
First, insurers keep increasing allocations to so-called alternative assets like private credit, private equity and securitisations.
This continues even with higher rates, which tells us yields aren’t the only reason capital flows there. Sector-wide exposure stays limited, but some insurers dial allocations up sharply to chase returns. These assets offer diversification perks and better matching for long-dated illiquid liabilities.
Supervisors worry about discretionary valuation, liquidity gaps, hidden leverage and good old credit risk. They respond with stress tests, thematic reviews, macroprudential guidelines and deeper dives into valuation playbooks.
The second shift is the rise of cross-border asset-intensive reinsurance. These deals hand off both investment and biometric risk tied to long-term life liabilities.
More of these transactions are expected as interest rates, credit spreads, pension reforms and demographic shifts keep reshaping balance-sheet economics.
Some regulators question whether firms use these agreements to exploit regulatory differences. They also track concentration risks at both the reinsurer and jurisdiction levels, plus the growing complexity of the contracts and possible conflicts of interest.
Recapture triggers can add a procyclical twist, especially if multiple firms face them at once.
And with a lot of risk pooling in a small cluster of reinsurers and host markets, supervisors keep a close eye on where the pressure might break first.
UK and Europe shows a patchwork of conditions
The European insurance industry is dominated by a few large multinational companies, such as Allianz, AXA, Assicurazioni Generali, and Zurich Insurance Group, but there are also many smaller regional or niche insurers operating in the market. The largest insurance markets in Europe are Germany, the United Kingdom, France, Italy, and Switzerland.
The UK and Ireland rank as the toughest zone
The UK and Ireland rank as the toughest zone, the only one filed in a soft state. Momentum there moves the wrong way, with Axa and Allianz both logging price drops in their P&C portfolios. Allianz even posted its first negative pricing shift in the UK since 2016, which raised eyebrows among brokers.
P&C Insurance Rates in the UK
Germany’s motor insurance market swings hard
Germany’s motor insurance market swings hard in the other direction. Rates that once sat near the top of the hard-market pile now skid quickly, with comparison sites reporting a sharp step-down.
It’s one of those markets where the turn feels abrupt, like someone flicked the switch.
France still shines as a bright spot
Pricing stays in a hardening phase, something Axa and Allianz appreciate because both carry strong franchises in that market.
Southern Europe looks healthier than many expected. Spain and Italy show solid prospects, with Spain seeing a re-acceleration in rates.
P&C insurance rates in Europe
Switzerland offers its own odd contrast
Motor insurance pricing surged over the last 18 months, far outpacing home insurance. Home rates only recently started a slow recovery after years stuck in neutral.
Analysts expect an acceleration next year as delayed adjustments finally seep through. Even with all these moving parts, most multi-line carriers have kept overall pricing steady this year.
The US insurance picture gets messy
Commercial property continues to soften, which nobody finds surprising anymore. The real concern sits in casualty. For the first time in 9 quarters, US commercial casualty pricing momentum turned negative across the board.
That shift fuels worries that premiums might not be rising fast enough to keep up with social inflation, meaning escalating litigation and jury awards.
Analysts warn that this needs close monitoring because broker chatter keeps circling back to this very point.
US P&C insurance rate change
Zurich Insurance Group stands out as the large multi-line carrier most exposed to changing US dynamics. Axa remains in a relatively good spot thanks to its French exposure, although commercial lines face some pushback.
Allianz also benefits from France but now deals with its first UK pricing declines in almost a decade.
Beazley carries the most exposure to cyber, a market that softened for ten straight quarters, though the report hints at green shoots that suggest pricing may finally be bottoming.
Among US-heavy carriers, Travelers, The Hartford and W.R. Berkley look sturdier than their European counterparts, still landing mid to high single-digit rate increases.
Despite all the softening talk, the near-term financial outlook doesn’t wobble much. Autonomous expects earnings through the rest of 2025 to remain well supported by earlier rate gains locked in this year.
The increasing frequency and severity of natural catastrophes (NatCat) due to climate change pose significant challenges to insurers. Supervisors need better tools and data to assess NatCat risks and coverage costs.
Global insured losses from natural catastrophes reach $80 bn in the first half of 2025.
This is almost double the 10-year average and more than half of the $150 bn (in 2025 prices) projected for the full year, following the long-term annual growth trend of 5-7%, according to Swiss Re Institute’s report.
With natural catastrophe activity typically higher in the second half of the year, total insured losses for 2025 could therefore exceed the projection.
Wildfire risk is evolving amid settlement trends and lengthening of fire seasons, with changing climates compounding the loss threat that fires present. This adds volatility to global natural catastrophe losses, making the latter more difficult to predict.
FAQ
Not fully. Analysts at Autonomous say most European and US P&C lines are drifting into softer territory, though only the UK and Ireland sit in a true soft state. Other regions feel more like slow-cooling markets after years of punishing hard cycles.
The short answer: competition. Marsh data shows global commercial rates fell 3% in 2025 after a 2% drop in Q4 2024. More carriers are chasing the same business, pushing rates down across nearly every region and product line except casualty.
Pretty exposed. Fixed income still dominates portfolios, so sharp rate swings feed directly into balance sheet volatility. Life insurers take the worst hit because long-dated liabilities can’t absorb inverted yield curves without tight ALM discipline.
AI promises speed and cheaper operations, but it also creates weird pockets of risk: faster surrenders, messy model failures, cyber exposure and governance gaps. Supervisors now probe AI frameworks, run risk surveys and set requirements to keep consumer outcomes from drifting offside.
Yield-chasing never truly stops. Even with higher interest rates, some insurers keep stacking private credit, private equity and securitisations to match long-term liabilities and add diversification. Supervisors worry about valuation discretion, liquidity traps, hidden leverage and credit stress.
Long-term life liabilities drive demand. These deals shift both investment and biometric risk to reinsurers, and the trend strengthens as interest rates, credit spreads, pension reforms and demographic shifts reshape economics. Regulators watch for concentration risk, regulatory arbitrage and procyclical recapture triggers.
NatCat losses hit $80 bn in the first half of 2025, nearly double the 10-year average, and wildfire seasons keep expanding. Cyber threats escalate alongside litigation risk. Wealthy clients especially feel the squeeze as insurance gaps widen in cyber, climate and legal exposures.
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AUTHORS: Nataly Kramer — Lead Editor at Beinsure Media, Oleg Parashchak – Editor-in-Chief at Beinsure Media
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.