International insurance markets are entering a new phase of the cycle. Rates have become increasingly competitive across the majority of businesses classe
s for some time, with recent market reports estimating that rates declined 4% in the fourth quarter of 2025 – the sixth consecutive quarter of moderation.
One notable exception is US casualty, where capacity constraints in certain classes of businesses and price increases in Q4 2025 have largely been driven by growing litigation funding, class actions and increasing court awards.
Across the broader market, however, capacity is strong and competition is healthy, w
hich comes as no surprise after several years of rate increases and improved profitability. For underwriters, this is not a setback but a moment of op
portunity: a chance to differentiate through expertise, deepen brok
r and client relationships, and deploy capital thoughtfully in areas where there is sustainable, long-term value.
In this environment, disciplined growth and technical underwriting expertise matter more than ever – and those who remain focused on fundamentals will be well positioned to come out on top.
Current Risk Landscape
Unlike with previous cycles, today’s underlying risk landscape is characterized by greater uncertainty across multiple vectors.
Geopolitical instability has affected energy costs and the price and availability of a range of goods and commodities. This is also affecting multiple lines o
f insurance – from property, transport and logistics and trade credit to political violence and terrorism and cyber coverage.
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Meanwhile, economic uncertainty has not only affected international trade and supply chains but has also put the brakes on investment and growth plans for a wide range of businesses.
Climate impacts cont
inue to deliver market shocks. The growing volatility and severity of secondary perils such as flash flooding, wildfire and severe conv
ective storms are making it increasingly challenging to model and price some natural catastrophe risks.
The first half of 2025 was the second costliest for insured losses to date, with California wildfires contributing half of the US$80 billion total – nearly d
ouble the 10-year average. The full-year total rose to US$107 billion, the sixth consecutive year of US$100 billion-plus losses, with US severe convective
storms a major contributor to both the half-year and full-year totals.
Meanwhile, set against the exciting opportunities offered by generative AI models, there is the emerging risk of AI-driven losses. An increasing proportion of business risks these days are intangible, and the growth of AI risks will add significantly to those intangible exposures.
