Aon, a global professional services firm, has released a new report warning that the current competitive market for commercial insurance buyers may not last long. In the second quarter of 2025, the insurance market shows signs of softness, but it’s a fragile softness, according to Joe Peiser, CEO of Commercial Risk for Aon. He described the situation as a soft market under pressure, rather than a typical easing of conditions.
While insurance capacity is growing and prices are generally falling in many areas, risks are also rising. Factors like geopolitical tensions, climate change impacts, cyber risks, vulnerable infrastructure, and disruptions in supply chains are creating challenges that could quickly close this favorable window for buyers.
In the U.S., casualty, property, and cyber insurance lines are facing ongoing losses, and with only a small amount of new capital entering the market, conditions could shift rapidly. Big or unexpected losses, along with global political or financial uncertainty, may cause insurers to suddenly pull back from taking on some risks.
Peiser suggests that businesses should take advantage of the current conditions to strengthen their risk management programs and think beyond just the immediate price. He encourages adopting a “total cost of risk” approach rather than simply focusing on short-term purchases. This mindset can help companies prepare for future ups and downs in the market.
The report also breaks down insurance market trends by region and product. It highlights that only the auto insurance market in North America and Europe, Middle East, and Africa (EMEA) is considered tough for buyers right now. Casualty insurance is moderately difficult in several regions, while most other lines, including cyber, directors and officers (D&O), and property insurance, generally offer more favorable conditions.
Property insurance prices are falling, especially in shared and layered programs, with many U.S. policies seeing double-digit discounts. Despite recent severe weather events like California wildfires, the market remains stable with increased insurer willingness to cover natural disaster risks.
Cyber and D&O insurance markets continue to be soft, with rates dropping and some clients getting better coverage for the same or lower prices. However, U.S. auto and casualty markets remain challenging due to rising claims. Insurers are still providing coverage but at higher costs and tougher terms. Many companies are exploring alternatives like captive insurance or taking on more risk themselves to manage expenses.
In terms of global pricing trends, Asia, EMEA, and Latin America are seeing small price drops, while the Pacific region experiences bigger declines. North America’s prices have stayed mostly flat, although underwriting in the region remains careful and capacity is steady.
Within the U.S., property insurance prices are dropping steadily despite ongoing concerns about natural disasters. Meanwhile, auto insurers are paying close attention to details like fleet safety and contracts, applying tougher scrutiny before offering coverage. Cyber insurance has plenty of capacity, keeping prices soft even as claims become more frequent.
D&O insurance in North America is still competitive, but rate reductions are slowing down, especially for large companies and financial institutions. The report also notes that a few insurers have recently pulled out of the U.S. D&O market, a trend that Aon is watching closely. For example, Markel Insurance recently exited some large D&O business and took a reserve charge related to these runoffs.
Overall, the insurance market today presents some good opportunities for buyers but also comes with risks. Businesses need to act wisely, considering the bigger picture of risk costs and building stronger protection to handle whatever lies ahead.