Fitch warns of softening ahead for London market property re/insurance

A new report from Fitch Ratings points to clear signs of significant softening in London market property re/insurance lines in 2025.

The rating agency noted that pricing began to markedly decline from its 2024 peak at the 2025 mid-year renewals in the London market.

Major losses have also weighed on profitability, most notably the Los Angeles wildfires in January 2025, which are said to have consumed roughly a third of insurers’ annual natural catastrophe budgets.

“With a significant proportion of 2025 catastrophe budgets already used up, further major losses could significantly affect profitability,” Fitch explained.

Hurricanes and earthquakes reportedly remain the largest exposures, but the increasing frequency of non-peak perils, such as flooding and wildfires, is also adding pressure to underwriting.

With this in mind, Fitch has anticipated London market combined ratios to increase, assuming normal levels of natural catastrophe-related losses as the pricing environment deteriorates from recent peaks.

The rating agency also underscored the importance of modernisation, noting that London market insurers have, in recent years, pursued operational efficiencies through digitalisation initiatives, efforts that, according to Fitch, could yield significant cost savings across the market.