Aon: Softening market window of opportunity for buyers as systemic risks mount

The global insurance market has entered a phase of softening conditions, but Aon has warned that this moment may be short-lived as systemic risks continue to intensify.

In its Q2 2025 “Global Insurance Market Insights” report, Aon described the commercial lines insurance business “at a crossroads”, with expanding capacity and falling rates offering favourable conditions for insurance buyers — even as geopolitical tensions, climate volatility and cyber threats escalate.

“Today’s market presents a unique, though perhaps temporary, window of opportunity for insurance buyers,” said Joe Peiser, CEO of commercial risk at Aon.

“We’re seeing increased capacity, improving terms and competitive pricing across many lines. However, what makes this moment truly distinct is the backdrop: a deeply interconnected risk environment where geopolitical tensions, climate volatility, cyber threats and infrastructure vulnerabilities are all intensifying.”

Peiser cautioned against complacency.

“This is not a typical soft market cycle; it’s a soft market under stress. That means organizations need to think and act strategically — leveraging favourable conditions to strengthen their programmes, optimise capital and build resilience for what comes next,” he said.

Strategic buying window

The report highlights that most global re/insurance markets saw increased capacity, flexible terms and falling rates in the first two quarters.

Property pricing continues to decline, with many US placements achieving double-digit reductions, particularly in shared and layered programmes.

Cyber and D&O markets also softened, with single- to low double-digit reductions and opportunities for clients to secure enhanced terms or limits at no extra cost.

Globally, pricing trends varied: Pacific markets saw property and D&O rates fall by 11–20%; while APAC, Latin America and EMEA reported average declines of 1–10%. North America remained flat.

However, the report warned that this trend could reverse quickly.

For instance, US casualty, property and cyber lines continue to show signs of underlying loss deterioration.

Limited new capital inflows mean the market remains vulnerable to sudden shifts in risk appetite.

Mounting systemic threats

Systemic risks are weighing heavily on insurers and clients alike, Aon warns.

Trade tensions and reciprocal tariffs are straining supply chains and contributing to inflation-linked claims.

Aon pointed, for example, to rising UK homebuilding costs, up £10,000 per unit in some cases, as a direct impact of such tariffs.

Political risk and aviation markets remain unsettled by the ongoing Russia–Ukraine conflict and volatility in the Middle East, the broker warned.

A recent UK court ruling on Russia–Ukraine aviation claims has sparked early signs of market tightening, including closer reserving and stricter terms.

Meanwhile, the climate crisis continues to expose critical infrastructure.

The recent Spain–Portugal blackout and the California wildfires are seen as signs of increasing vulnerability.

With above-average activity forecast for the Atlantic hurricane season, insurers are bracing for further natural catastrophe losses, which have already reached $100bn in the first half of 2025 — the second-highest first half loss amount on record.

Cyber and alternative risk solutions

Despite market softness, the cyber market remains underinsured, Aon said.

Emerging threats such as deepfakes, AI-driven fraud and ransomware continue to evolve, raising the risk of large aggregated loss events.

While some clients are using premium savings to expand cover, systemic exposures remain a key concern.

Aon also noted a growing shift toward non-traditional solutions.

Clients are increasingly using analytics, alternative capital and advisory services to manage volatility and pursue a total cost of risk strategy. Interest is rising in weather-triggered and supply chain-linked parametric insurance, particularly among energy, infrastructure and agribusiness clients.

Facilities like the Aon Client Treaty are also gaining momentum, especially in the London Market, the broker suggested.

“This is a strategic moment. But it’s not one to waste,” Peiser concluded.