Are insurance markets really softening?

Is the global insurance market softening? Not really according to industry stakeholders, including major brokerages Marsh, WTW and Aon. Reports from these companies say directors and officers (D&O) is soft and cyber soft or close. However, inflationary and dynamic pressures remain in other lines, including property and casualty (P&C) insurance.

“The insurance market is changing from tight to soft,” says Scott Eccleston (pictured above). “I would classify it as multi-speed.”

Eccleston is the head of Global Placement for Marsh in the Pacific region. He said the D&O market is now in a soft cycle.

“Although all the other classes have not yet arrived,” said the Melbourne-based trader.

The competition is back on other lines

Marsh's leader said improved underwriting performance and an increase in gross profit are the reasons for the softening.

“This has led to increased appetite for growth and a welcome return to competition and choice for the insured,” he said. “Insurers have entered growth mode but remain cautious, especially for insurers with exposure to natural disasters.”

Nat cats in Canada, UK and California

Globally, that exposure has been particularly prominent this week.

Meanwhile, the UK is experiencing severe flooding and California is being devastated by the Bridge Fire.

At the time of writing, evacuations are underway in Florida as Helene, a category 1 hurricane, makes landfall.

Lots of integration options

However, despite these challenges, sellers and buyers in other markets are seeing more coverage options.

Eccleston pointed to Australia.

“We are seeing a selection of insurance companies, both existing insurance companies that are keen to grow as well as new market entrants such as Everest, Markel and the continued emergence of new insurance MGAs (general managing agents),” he said.

Property market as “multispeed”

The property market in Australia – and probably elsewhere – is a good example of Eccleston's description of global insurance markets as “multispeed.”

“The domestic market still faces a major challenge for homeowners in natural disaster areas due to hurricanes or bushfires, and the auto insurance market where inflation has a negative impact on repair costs,” Eccleston said.

Another reason for the difference is the writing performance.

“Commercial property insurance markets premium rates have been rising for over seven years so the recent change in buying conditions is not a surprise,” he said. “Underwriting performance has improved significantly and the strong market phase has lasted a year longer than some expected.”

Eccleston said insurers have “earned more than just the level they need or want.”

LTAs are back

Another sign of softening the market, says Eccleston, is the return of long-term leases (LTAs).

“I can't say that LTAs have spread yet, but they have returned to the framework and are being discussed,” he said.

Leader Marsh recommended that insureds seriously consider LTAs in the D&O market, especially if they are changing their carrier.

“This will provide certainty in year 2 or even year 3,” Eccleston said. “All in all it's a good sign for everyone that LTAs are back in fashion.”

What does 2025 look like?

In a recent article, the Agent Support Network of America (ASNOA), a network of insurance agencies, was optimistic that insurance markets will continue to soften through 2025.

What signs of insurance market softening do you see? Please tell us below