The outlook for the insurance sector remains stable for the remainder of 2025 despite an uncertain macroeconomic and geopolitical landscape. Profitability and solvency remained stable supported by solid underwriting performance and strong investment return across the market. Insurers are focusing on growth by underwriting new business, making strategic acquisitions, repositioning assets and leveraging digital tools such as AI driven analytics to improve efficiency and customer engagement.
Global insured losses from natural catastrophes reached US$137B in 2024. The largest contributors being hurricanes Helene & Milton, severe convective storms (SCS) in the US, large scale urban floods around the world and the highest ever recorded natural catastrophe losses in Canada. Notwithstanding, when measured against the estimated available global reinsurance capital of US$500B these global losses merely amount to an earnings impact and have not had any material effect on the amount of available reinsurance capital which continues to grow year on year.
On aggregate, combined ratios (loss and expense against premium) for insurers have been between 90 per cent to just below 100 per cent since 2019 amounting to 5 years of sustained underwriting profits. Return on assets also increased due to favourable investment conditions.
In conclusion, there is a surplus of global capital available and this is resulting in softening market conditions both in terms of price and coverage across most product lines.
We consider that the insurance clock remains at “3 O’clock”:
Property
New managing general agents (MGAs) and underwriting agencies have enabled increased competition locally which is benefiting policyholders by way of improved pricing and overall service. In addition, following a 0.5 per cent rate cut, borrowing costs for insurers have also improved, albeit this has resulted in lower investment returns.
Natural perils continue to be of concern following several major events including the California wildfires as well as earthquakes in the Tibetan Plateau and Myanmar leading to insured losses exceeding US$53B. With Swiss Re forecasting a 5 to 7 per cent annual increase in natural catastrophe losses, it is unsurprising that initiatives such as the Australian Reinsurance Pool Corporations cyclone fund for North Queensland and the Insurance Councils Flood Defence Fund are continuing to gain traction in terms of premium affordability and the protection of those most at risk from weather related perils.
Commercial General Liability
The current soft market cycle continues to offer premium reductions of around 5 to 10 per cent. Again, increased competition locally owing to new market entrants, has improved capacity and flexibility. This has resulted in the local market generally offering ambitious pricing when compared to Lloyd’s of London including a reduced excess and broader coverage terms.
Coverage for PFAS and sexual abuse/molestation remains excluded as standard, and businesses should continue to implement strong management and compliance processes to mitigate the risks associated with these matters.
Workers Compensation
Australia’s workers’ compensation system remains complicated. Whilst premiums remain stable in many states, growing costs pressures have led to targeted reforms, enhanced return-to-work frameworks and highly selective rate increases.
There continues to be growing concern around the rising costs, particularly for psychological injury claims with all states focusing on mental health, occupational disease alongside early rehabilitation with a view to ensuring long-term scheme sustainability.
Corporate Travel
The market continues to soften with increasing demand for business travel leading to ample capacity. Despite policy coverage remaining broad overall, and COVID-19 exclusions having almost vanished entirely, exclusions relating to both Russia and Ukraine remain commonplace.
Caution is still required for those seeking to add cover for leisure travel to their corporate travel policy, particularly where this accounts for more than 25 per cent of their overall travel. Such policies are becoming increasingly difficult to place with many insurers exiting the leisure market completely or choosing to add tighter restrictions around executive’s private travel.
Group Personal Accident
Demand for personal accident policies has continued to rise following return to office mandates issued by many employers. This in turn has resulted in an increase in journey-based claims, as employees are travelling more frequently between home and the office.
Ongoing increases in medical costs, wage reviews and inflation are adding to pressure on insurer rates. Businesses are encouraged to review their weekly benefits caps to ensure these align with the growing costs of living to ensure these remain adequate.
Motor
The motor market is currently experiencing a surge in pricing with rate increases of 5 to 10 per cent being commonplace for those with small vehicle or small fleet policies. This is largely driven by increased claims costs associated with technological complexities presented by systems such as advanced driver assistance systems or electric vehicle parts and labour all of which lead to longer overall repair times.
Heavy motor and large fleet policyholders are benefiting from a period of pricing stability with risk management incentives in place for those utilising systems such as GPS tracking and telematics.
Contractors Plant & Equipment
The Australian market remains fluid, but favorable for those with risk-managed and claims free fleets. Returning local and overseas capacity in this space has resulted in increased competition and is driving premium reductions of 5 to 10 per cent.
Whilst the overall effects of inflation are easing, underinsurance on the whole remains a particular point of concern with fleet owners encouraged to factor in delays for equipment repairs, increased costs of working, as well as independent valuation costs to ensure peace of mind and sufficient cover in the event of a claim.
Cyber Liability
With increasing exposure for businesses following major changes to privacy and cyber laws, it is unsurprising that the market appetite remains strong with coverage being broadly accessible, even for those with basic cyber security standards.
With ASIC enforcements growing, it is evident that cybersecurity is now a board-level issue with the expectation that businesses will, amongst other matters, strengthen their technical controls and minimise bring your own device (BYOD) related risks. Businesses are strongly encouraged to review their cyber insurance programme to ensure they are covered for the ever-evolving cyber landscape.
Management Liability
Whilst the market has remained largely stable, there is increased scrutinty from insurers for those sectors particularly exposed to insolvency risk, employment disputes or regulatory scrutiny such as construction, retail and hospitality.
One such example includes those operating in the private credit space, namely start-up investment managers have seen the tightening of underwriting criteria, restrictive terms and broad exclusions around insolvency and financial mismanagement.
Insurers are now also closely reviewing workplace culture, policies, training and HR protocols following huge cultural shifts and reforms following a 27 per cent increase in workplace claims to the Fair Work Commission with a view to ensuring they are engaging with businesses who are proactively managing their risk.
Businesses which can demonstrate strong financial health, stable cash flow and good internal controls can expect favourable pricing and reductions of 5 to 20 per cent.
Directors’ & Officers’ Liability
Australia continues to benefit from strong capacity and competitive pricing with well-managed and perceived ‘low-risk’ industries benefiting from reductions of 15 to 40 per cent from both local and Lloyds markets.
We would caution however, that the current soft market is showing signs of slowing as a result of growing regulatory pressures. This includes reforms to the Privacy Act 1988, new ESG reporting requirements, increased climate litigation alongside a marked increase in the issuance of Director Penalty Notices by the ATO which are expected to lead to an increase in claims.
Professional Indemnity
Financial Services Licensees
Premium reductions of 5 to 10 per cent are not uncommon for those firms who have strong governance and compliance controls in place. Those firms managing funds exposed to property developments, private credit, or debt funds are being selectively underwritten, often with prejudicial policy exclusions.
Accountants
Rates remain favourable with reductions of 5 to 15 per cent, although the upcoming ESG reporting requirements have prompted insurers to raise further queries around firms ability to upskill and keep pace with the same. Firms with high exposure to audit services, valuations or R&D advice continue to face a lack of insurer appetite.
Information Technology and SaaS
Our perspective has changed very little since our January 2025 market update with managed service providers (MSPs) continuing to face ongoing regulatory challenges. MSPs are recommended to ensure that they are able to clearly and articulately define the scope of the services provided as a failure to do so will result in a decline to quote by insurers.
Solicitors
The solicitors top-up market has retained significant capacity for those seeking coverage over $30M with many firms leveraging existing market conditions to secure increased limits at a reduced cost.
Property Professionals
Whilst the general market appetite remains broad, as per our January market update, insurers remain cautious about strata managers, residential property managers and those involved in off-the-plan sales. This has led to many insurers adding additional exclusions regarding bodily injury claims relating to property management activities. Businesses are encouraged to invest in differentiators such as software-driven inspections or repair alert systems to help secure lower rates.
Construction Professionals
The market remains soft for construction professionals with strong insurer appetite and rate reductions in the region of 10 to 15 per cent for low risk and claims free businesses. We would caution however, the market is beginning to show signs of hardening and we expect this to hit sooner than anticipated owing to increased litigation and the associated legal costs.
Insurers continue to remain cautious of those undertaking certain activity types including structural and geotechnical engineers, design & construct contractors, building certifiers, high rise residential and building certifiers for which additional underwriting scrutiny and exclusions are commonplace.
Transaction M&A and Contingent Risk
In the current precarious macroeconomic environment, warranty and indemnity insurance (W&I) remains a key deal facilitator and risk mitigation tool for buyers and sellers. US policy and fiscal shifts are causing a “wait-and-see” approach among dealmakers whilst other geopolitical tensions have resulted in elevated concern around cross-border execution and regulatory risk. In the absence of any fundamental fractures in the economy, it is only a matter of time before the market recovers to a more stable state. Deal parties will need to be poised for a surge in M&A activity when the tide comes in and can turn to the transactional risk market to mitigate both W&I and known contingent risks.
Construction Material Damage
Overall, the market is going through a period of positive change with new entrants to the market, increased competition, and decreased rates, particularly for those operating in the sub $10M turnover space.
Insurers remain focused on securing policyholders with strong risk management profiles, positive claims history and those engaged in low-hazard activities.
Insolvencies remain a key concern for insurers. With further predicted insolvencies over the course of 2025, insolvency related costs remain high and it is commonplace for premium increases and exclusions to be in place for those projects impacted by insolvency risk.
Construction Liability
For construction liability, there is a growing concern that the current softening market may not last much longer with geopolitical tensions and global economic factors expected to drive capital away from the Australian market leading to tighter policy conditions. This is particularly relevant given the long-tail nature of liability claims.
It is recommended that policyholders consider insurers with strong financial stability and long-term commitment to the sector as opposed to seeking short term premium savings from new market entrants which could lead to a lack of cover should they leave the market in the near future.
Renewables
The market is softening, which presents opportunities for competitive pricing and favorable terms. However, policyholders still need to err on the side of caution when selecting insurance providers given the complexity of risk associated with renewable assets. As the energy transition towards renewables continues to gain momentum, in the move towards net zero, we expect insurers to play a more active role in adapting to new technologies, offering tailored insurance solutions and collaborating closely with developers to understand commercial drivers and long-term goals.
Strata
Whilst the strata market remains stable, insurers are keeping a close eye on the underlying risk and claims history for each strata plan. Those with a poor claims history, structural defects, or ongoing maintenance issues are likely to experience continued difficulty in obtaining a quote.
Ongoing concerns continue around underinsurance, fire risk management (in particular around Electric Vehicles) and criminal activity for those properties associated with tobacconists.
In conclusion, Bellrock maintains a positive outlook on market conditions for the remainder of 2025. We expect the market will continue to soften on property typified by premium/rate reductions and improved coverage conditions. We caution that this is on the understanding that there are no material insurable losses stemming from the US hurricane season and on the assumption that aggregated insurable losses related to natural catastrophes globally track in line with expected growth targets (US$145B). Likewise, market conditions on casualty and financial lines policies will continue to soften until global and local economic conditions materially deteriorate resulting in an increase in the frequency and severity of claims, rendering casualty lines unprofitable.
For further in-depth commentary please see our range of individual reports in the directory below.
Continue reading our full range of market updates:
- Insurance Market Overview: July 2025
- Property
- Commercial General Liability
- Motor
- Contractors Plant & Equipment
- Renewable Energy
- Strata
- Claims
- Workplace Risk
- Executive & Professional Risk
- Construction
