Softening conditions make for a buyer’s market

The Public & Products Liability (PL) market remains broadly soft, although conditions vary significantly by risk profile, creating a clear two‑speed dynamic. Mid‑market corporates are benefiting from strong competition and abundant capacity, with rate reductions typically in the region of 20–25%. By contrast, larger and more complex risks are seeing more moderate outcomes, with pricing generally 0–10%. Firms with significant US exposure continue to sit outside this trend, with flat or upward pressure on rates reflecting sustained underwriting caution.

These trends are reflected across capacity and competition. Despite stability overall, many insurers have actively reduced their exposure to US‑domiciled liabilities in recent years, particularly in areas such as products and excess auto liability. While appetite remains at the right price, this has led to more constrained capacity in higher excess layers, with greater reliance on facultative reinsurance to support placements. At the same time, insurers are applying more scrutiny to chemical exposures, such as PFAS and benzene, as well as emerging class-action risks linked to ultra‑processed food and lithium-ion batteries. Coverage is also tightening selectively, with exclusions or restrictions more frequently applied to areas such as PFAS and wildfire exposures.

The claims environment continues to present underlying pressure, with cost of care inflation outpacing broader economic trends and contributing to increased severity. This is despite an overall decrease in PL claims, which fell approximately 5–8% in 2025 versus the previous year. Looking ahead, pricing is expected to remain relatively stable in the near term, with treaty renewals indicating limited further softening. In this environment, clients should focus on leveraging stable pricing to secure improved coverage terms, including enhancements to limits and sub‑limits. Where appropriate, longer‑term agreements may provide value, although caution is warranted where future pricing remains uncertain or where insurers signal rate increases.

The Professional Indemnity (PI) market remains firmly in a soft phase, with favourable conditions for most clients. Abundant capacity – driven by new entrants, including several MGAs, alongside expanding insurer appetite – is sustaining strong competition across the market. As a result, pricing continues to improve, with most insureds with strong claims records benefiting from double‑digit rate reductions. This dynamic reflects both the legacy profitability generated during the recent hard market and continued insurer pressure to deploy capital and achieve growth.

Despite this, outcomes remain differentiated by risk profile. Distressed risks – particularly those with poor loss histories or exposure to construction‑related liabilities – continue to face more constrained outcomes. Fire safety and cladding exposures remain a key area of focus, with legacy claims still developing. However, there has been a notable improvement in coverage availability, including the removal of retroactive date restrictions. More broadly, insurers are applying increased scrutiny to areas such as sanctions exposure, particularly where US‑domiciled insurers are involved, reflecting heightened regulatory and legal sensitivity.

Looking ahead, current conditions are expected to persist, with continued rate reductions of around 10% likely in the near term and potential for further softening as competition intensifies. Greater levels of capacity are also driving insurers to seek more participation on existing programmes, often through lower attachment points. Against this backdrop, clients may wish to consider reinvesting premium savings into programme enhancements – particularly increased limits – ahead of any potential market recalibration.

The Directors & Officers (D&O) Insurance market continues to favour clients. In most cases, premiums are either reducing or holding stable – a product of the ample capacity available for most risks. Some insurers are now reaching minimum premiums on risks which have experienced multiple renewals with reductions. This aligns with insurer feedback that pricing is reaching the pre-hard market levels of 2019.

This abundance of capacity is a product of the strong insurer appetite across the market. Most carriers are actively seeking to grow and are under pressure to meet premium‑income targets in a reducing‑rate environment. With competition intensifying, insurers are writing more business to maintain top‑line growth, and are increasingly looking beyond core D&O to ancillary ML lines to support broader portfolio expansion. Nevertheless, an increase in insurer consolidation suggests that this period of calm may not be permanent. Although any immediate impact on buyers is unlikely, these developments should feature in pre-renewal strategy for all clients in 2026.

At the same time, claims activity across the market is increasing in both frequency and complexity. Cyber incidents, emerging AI‑related exposures, and geopolitical volatility – including trade disruption and regulatory divergence – are expanding the range of potential D&O triggers. The most commonly include disclosure failures, mismanagement, and regulatory breaches. All these factors are contributing to a widening disconnect between pricing and exposure, with insurers absorbing increasing loss pressure despite sustained rate reductions. While the current environment remains favourable for buyers, these dynamics suggest that market conditions may begin to recalibrate if profitability comes under sustained pressure.

The Cyber Insurance market continues to provide favourable conditions for clients, with last year’s reductions carrying through into the first half of 2026. Even more importantly, carriers have shown willingness to expand coverage into new exposures where the market previously lacked appetite. This combination of pricing competitiveness and broader coverage is being driven by strong insurer growth ambitions, an influx of new market entrants, and increased deployment of capacity as reinsurers apply limited upward pressure. Insurers continue to differentiate themselves through enhanced policy structures – including any‑one‑claim limits, customer business interruption extensions, and reinstatement options – particularly for well‑performing risks.

This positive news come despite a year that saw some of the most consequential cyber incidents in recent history, with several major ransomware attacks significantly impacting company earnings. It was also arguably the first time in which a cyber event had a direct, substantial impact on UK consumers, helping to elevate public awareness of cyber security to an unprecedented level. In addition, many of the affected clients were under- or un-insured. While this insulated the insurance market against the bulk of the costs, it did see buyers incur direct impacts to their profitability and balance sheet resilience.

At the same time, underlying loss trends continue to deteriorate, with both claims frequency and severity increasing across the market. Despite representing a relatively small proportion of claims, ransomware continues to account for a disproportionate share of insurer payouts, highlighting the growing severity of major incidents. Developing claims from recent underwriting years are also trending higher than expected, and prolonged recovery periods are increasing overall loss costs. This widening gap between pricing and exposure suggests that current conditions may be approaching an inflection point, with insurers likely to reassess pricing adequacy and underwriting discipline if loss experience continues to worsen.

The Marine Cargo Insurance market remains in a strong and highly competitive position. With limited exposure to recent large‑scale catastrophe losses, insurers continue to trade positively, supporting active competition and continued soft pricing. If not remarketing their risk, most clients can expect renewal reductions in the region of 10–15%. But reductions may be larger for more aggressively marketed risks, with scope for reductions of up to 30% where competition is maximised.

In part, this is a response to softer conditions in adjacent classes. The Property market is proving an attractive choice for stock placements, with significant rate reduction soft up to 40–50% – even in areas with natural catastrophe exposures. This is placing downwards pressure on renewals for Stock Throughput Insurance (STP). But despite softening across the market, underwriting discipline remains largely intact. In contrast to previous soft cycles, insurers are maintaining firm positions of coverage areas such as misappropriation and delay.

Recent geopolitical disruption due to the conflict in the Middle East has introduced localised complexity, including extended transit times and rapidly evolving risk conditions. The impact on the Marine Cargo Market is limited, however, with conflict-related damage typically excluded from standard policies. More broadly, emerging risks such as organised cargo crime and supply chain disruption are becoming more prominent, although they have not yet materially influenced pricing. Against this backdrop, favourable conditions are expected to continue in the near term, albeit with growing sensitivity to external shocks and competitive pressures across adjacent markets.

The UK motor fleet market is currently highly competitive, particularly across regional and mid‑market business. Strong insurer appetite and aggressive growth targets are driving sustained rate reductions, even on accounts with higher loss ratios. Across reasonably sized fleets, with typical decreases in the range of 15–20% for average-performing risks. This soft market dynamic is more pronounced outside the London market, where pricing competition is particularly intense due to the concentration of regional business.

This environment is being driven less by underlying performance and more by insurer strategy. With growth harder to achieve in property and casualty markets, insurers are increasingly using motor to support their premium targets, despite its historically weaker profitability. Capacity is evolving through targeted activity rather than large limit deployment, with newer entrants and niche players focusing on telematics‑led propositions and emerging areas such as electric vehicle fleets. At the same time, appetite has broadened in certain sectors, including haulage and logistics, although more challenging classes (such as bus, coach and self‑drive hire) continue to face constraints.

Despite favourable pricing, the underlying trajectory points to a relatively short cycle. Claims dynamics remain mixed, with lower frequency offset by rising severity. The average cost of a repair increased to £5,191 in 2025, up from £4,162 in 2019 – largely driven by more complex vehicle technology, along with rising labour costs. In the event of a severe winter, weather-related claims could quickly erode current profitability, prompting a reassessment of pricing discipline. Most insurers expect continued softening through the near term, but with the potential for stabilisation or modest increases in the medium term. Against this backdrop, clients should take advantage of current conditions while maintaining strong focus on risk management fundamentals, using telematics and data to demonstrate improvements and position themselves effectively for any market correction.