Aon reports expanding insurance capacity amid rising global risks

Aon, a global insurance and reinsurance broker, has released its Q2 2025 Global Insurance Market Insights, highlighting a notable phase in the insurance market where increased capacity and softening rates are coinciding with intensifying systemic threats.

According to Aon, market conditions in the second quarter were broadly favourable for buyers, with greater availability of cover, more flexible terms, and competitive pricing across many lines.

However, Aon warns that these benefits may be short-lived. Underlying loss trends in US casualty, property, and cyber remain concerning, and with only limited new capital entering the traditional re/insurance market, any major event could prompt a swift change in appetite.

Aon’s report shows that most global regions, including Asia Pacific, Latin America, the Pacific, and EMEA, experienced average premium reductions of 1 to 10 percent, with the Pacific seeing the sharpest falls — up to 20 percent — particularly in property and directors’ and officers’ (D&O) insurance.

In the US, property placements recorded double-digit decreases, especially in shared and layered programmes. The cyber and D&O markets remained soft, with some clients securing broader terms or increased limits at no additional cost. North America was the exception, where pricing remained largely unchanged.

Despite these positive market dynamics, Aon highlights the growing impact of systemic challenges. Geopolitical uncertainty continues to disrupt trade and supply chains, with tariffs driving up costs — for instance, UK homebuilding expenses are projected to rise by £10,000 per unit.

Aon also draws attention to the ongoing effects of the Russia–Ukraine conflict and instability in the Middle East, which are contributing to unease in political risk and aviation markets. A UK court ruling on aviation claims related to the Russia–Ukraine war has already triggered cautious responses from insurers, with expectations of tighter terms and wider reserving.

Aon underlines mounting climate and infrastructure pressures as well. Events such as the Spain–Portugal power outage and California wildfires have exposed vulnerabilities in critical systems and contributed to the accumulation of secondary peril losses.

With the Atlantic hurricane season now under way and expected to exceed normal activity, near-term exposure to natural catastrophes is elevated. Aon reports that global insured catastrophe losses reached $100 billion in the first half of 2025, marking the second-highest H1 total on record.

Cyber risk continues to be a major area of concern. Despite increasing competition and expanding capacity in the cyber insurance market, Aon emphasises that coverage levels remain far below what is needed.

Emerging threats driven by artificial intelligence—such as deepfakes, identity fraud, and ransomware attacks—are becoming increasingly sophisticated. While many clients are leveraging lower premiums to enhance their coverage or secure higher limits, the risk of large-scale loss events persists.

Aon also points to a shift in how organisations manage risk, moving beyond simple insurance transactions. There is a growing focus on comprehensive risk management strategies that consider the total cost of risk, supported by greater utilisation of data analytics, expert advisory services, and alternative capital sources.

Insurance solutions tied to specific triggers like weather or supply chain disruptions are gaining traction, especially within the energy, infrastructure, and agricultural sectors. Similarly, structures like the Aon Client Treaty are becoming more widely adopted, particularly in the London Market.

Although the present market presents valuable opportunities for buyers, Aon advises vigilance due to evolving conditions and growing systemic risks. The chance to capitalise on the current favourable environment could be limited and may close quickly.

“Today’s market presents a unique, though perhaps temporary, window of opportunity for insurance buyers,” commented Joe Peiser, CEO of Commercial Risk for 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 further added: “This is not a typical soft market cycle; it’s a soft market under stress. That means organisations need to think and act strategically — leveraging favourable conditions to strengthen their programs, optimise capital, and build resilience for what comes next. At Aon, we’re helping clients move beyond transactional buying toward a total cost of risk mindset, so they can make better long-term decisions and navigate volatility with greater confidence.”

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