Buyer-friendly conditions spread in Europe as market enters new phase

European buyers face increasingly favourable market conditions, with the cost of cyber and financial lines cover still falling and softening spreading to more countries, experts have told Commercial Risk. Most P&C lines are at least stable, with brokers and insurers agreeing that we are now entering a new phase of the market driven by robust competition as carriers seek growth.

But market discipline remains and there are difficult areas, such as loss hit property, US casualty and commercial auto. Insurers report that overall rates were still just about positive at 1 January, but Marsh’s Global Insurance Market Index found that average commercial insurance rates fell in Europe for the first time in years during Q4 2024.

The market outlook is positive for 2025 as far as European buyers are concerned, with insurers increasingly in robust health, but there are potential headwinds to keep an eye on. And the trend for individual micro cycles, rather than the market moving as one, looks here to stay.

The commercial insurance market continues to favour large European buyers, with price reductions, particularly in financial lines and cyber, alongside higher capacity across most countries at year end, said Tyson Vickery, global placement leader for Marsh Europe.

“Favourable market conditions continue in EMEA for the majority of buyers – a perfect opportunity to challenge and improve coverage conditions and drive innovation in product lines,” added Terrence Williams, chief broking officer of Commercial Risk Solutions EMEA at Aon.

Vickery said there was general rate softening at 1 Jan as trends carried over from Q4 2024. “Financial lines continued to soften significantly,” he said.

Marsh’s index found that European rates were down 2% in the final quarter of last year, although the softening was driven by lower costs for financial and professional lines and cyber, while property and casualty rates were flat.

Vickery told Commercial Risk that European P&C rates remained stable at 1 January, with reductions for less risky industries. Larger countries in Europe are beginning to see increased competition due to additional capacity, he added.

“Property rates remained stable in larger countries like Germany and Italy, although low-hazard sectors experienced reductions of 5-10%. Casualty rates were stable to down by 5%, with Italy seeing declines of 10-15%,” said Vickery.

“European construction rates remained stable, and D&O insurance saw decreases of 5-10%, with Italy experiencing larger reductions of 20-25% for risk management clients. Cyber insurance rates averaged reductions of 15-20%, with some outliers facing declines of 50% or more, while marine insurance rates decreased by 5-10%,” he explained.

The broker said that, overall, insurers are looking to deploy more capacity to enhance their market positions, but added there are “no significant new market entrants yet”.

Vickery said retentions are mostly stable in Europe, with clients eager to maximise premium benefits from favourable pricing trends. Meanwhile, increased competition in certain markets has prompted insurers to consider reinstating some coverages and limits that fell away during tougher market conditions, he said, noting that this varies by insurer.

However, clients with significant claims activity, or those in heavy industries, faced “minor” P&C rate increases at 1 January, said the broker. Some areas of the market clearly remain more difficult for European buyers.

“Natural catastrophe exposure remains a concern for property insurers, especially as global and regional loss expectations rise. Additionally, US exposure for motor and excess/umbrella casualty insurance is still challenging,” explained Vickery.

Aon’s Williams described rates as moderate across much of Europe, with increasing competition leading to “buyer-friendly” conditions in some lines, notably cyber and D&O. Capacity is “abundant” for most European companies as insurers go for growth and new players enter the market, he continued. Cover is stable, with options for broader wordings in cyber and D&O, he told CRE.

“The cyber market is softening, and most buyers continue to benefit from year-on-year price reductions. Increasing capacity and new entrants are driving increased competition, especially in excess layers. At Aon, we have seen some buyers reinvesting premium savings to secure additional limits and those buyers are benefiting from broader cover options,” said Williams.

“Buyer-friendly conditions have also continued in the D&O market, although the softening is decelerating. Insurers are raising concerns about the need for sustainable pricing. However, given the abundance of market capacity, we do expect soft market conditions to generally continue,” he added.

But Williams also noted that recent losses are leading to rate increases for natural catastrophe risks and capacity restrictions in certain geographies.

Nat cat losses are a “growing concern” among property insurers, he said. “Following several extreme weather events in recent years, some insurers are starting to review their risk appetite in geographies not previously considered to have significant exposure,” said Williams. He explained, however, that reductions in local property capacity have been partially offset by competition from international markets

US-exposed casualty risk continues to be challenging from a pricing and capacity perspective, while automobile cover is tricky too, said Williams.

“A hard market is taking hold in commercial automobile as insurers look to manage claims inflation. Higher repair costs, electric vehicles and insurer withdrawals are driving price hikes for automobile, and there is a general refocusing of appetite, with some insurers re-evaluating their level of participation in the market,” he said.

The broker added that there continues to be coverage restrictions related to PFAS exposures and ongoing geopolitical events.

Williams said that buyers in the UK, Spanish and Portuguese markets are enjoying particularly favourable conditions.

“Market conditions across key product lines in the UK have softened by some pace during 2024. It has been encouraging to see that competition is healthy and capacity is abundant for most lines, supported by positive results and insurer growth ambitions. In Spain and Portugal, softening in the market continues to accelerate, resulting in buyer friendly conditions for both new placements and renewals,” he said.

“And if we look at EMEA in its entirety, hard market conditions that have previously persisted in countries such as Turkey are now giving way, opening the door to continued momentum and buyer-friendly conditions,” he added.

London market specialty broker Miller also reports softening for large clients in the Spanish market due to “significant increases in available local capacity” as many insurers open new regional offices.

“These markets are targeting large accounts and many of them share the same strategy of looking for leadership positions,” said Tim Nagle, head of Miller Europe.

Nagle said that while there will always be regional variation, the overall European market appears to be stable and “moving towards a softer” space. But underwriting discipline is mostly being maintained, with certain occupancies still proving difficult to place, he added.

A key dynamic is that local European markets are cheaper than those wholesaling into London, he said.

Nagle explained there is “much more” capacity available in the European market across almost all lines of business, creating some downward pressure on rate. Miller has also observed new MGA entrants coming to market, notably in cargo and surety.

Nagle said there have been no significant changes in retentions except for cyber, where they have fallen as the line of business softens. He added that local European markets tend to have lower retentions than business wholesaled into London. Terms and conditions are stable across most lines, he added.

The broker said the German P&C market is stabilising and moving into a softer cycle, with rate decreases of up to 5%. The French P&C market has “strong competition among property brokers and insurers, bringing the market to a softer cycle”, he continued.

Cyber softened significantly in the second half of last year, with rating, retentions and underwriting discipline all dropping, according to Jake Tobin, Miller’s chef commercial officer. “There were fewer large first-time cyber buyers in 2024, meaning more competition on large accounts, with reductions of over 25%,” he said.

Nagle said there is some downward pressure in the energy market as insurers anticipate the end of coal and oil sands coverage planned for 2030, with some already terminating their participation. “Pricing for non cat-exposed onshore renewable energy assets in Europe, for construction and operation, remains competitive,” he said.

Tobin explained that while there hasn’t been “significant” energy market softening yet, a lot of new capacity has arrived in London and Europe at the start of 2025, which may change things as the capacity seeks volume.

Miller said there is general softening within casualty across all industries, with no signs of things slowing down. “As a result, the London market is struggling to keep up,” it said.

The broker added that several European hubs and the London market are actively increasing capacity for onshore renewables business in Europe as they seek to balance their US nat cat exposures with European non-cat.

Nagle said capacity in the marine war market remains steady, with rates for annual cover largely unchanged. Rates for voyages into Breach of Warranty areas continue to be competitive as capacity increases and new markets enter the class, he continued.

There is ongoing competitive for downstream energy business, Miller said. But it is seeing local markets reduce capacity for war risk. However, this is offset by capacity in the London Market, explained Nagle.

Robert Riha, chief client and distribution officer for APAC and Europe at AXA XL, said the European market is now on “sound footing”, adding that we are entering “a new phase of the cycle”. “Pricing has moderated over the course of 2024, and though the market remains disciplined, competition has increased,” he said.

Riha believes the insurance industry is now in “robust health”, with strong capital levels and a renewed appetite for growth.

“After several years of corrective actions, the property and casualty markets are now back on an even keel. Rates across most lines are now broadly adequate, and the market has turned its focus towards growing,” he said.

“We’ve seen favourable terms and conditions for renewals for traditional lines of business, including property, casualty and marine, with pricing now at a sustainable level. Following several years of adjustments, the marine market has reached a stable point, and clients who have invested in risk management strategies are being recognised for their efforts,” he continued.

Adding: “We’re seeing a transitioning in casualty but still feel the impact of the US market from social inflation and nuclear verdicts etc.”

Scott Toland, chief underwriting officer for EMEA at Zurich Insurance, said insurers now face “market pressures” in a “moderating marketplace”, which ultimately saw his firm continue to achieve positive rate overall at 1 January but not at levels seen in previous quarters. Toland said newer market entrants continue to deploy capacity.

“We see more downward rate pressure in D&O and cyber. Casualty programmes with US exposure have remained disciplined in their approach, which is absolutely critical as see claims inflation continue to drive results in an adverse manner. Property risks with challenging nat cat profiles have also remained consistent in their approach and in need for rate,” he said, giving a remarkably similar views to the brokers.

“We continue to see a dynamic marketplace that requires our underwriters to keep focused on risk selection…with heightened focus on analytical analysis,” he said.

Toland thinks it is critical that insurers stay consistent on terms and conditions. But he said certain markets are adjusting “levers that are available in structuring their programme”.

He added that each European market has its own nuance and certain lines in certain countries are at different points in the cycle, but said things are “broadly” consistent across EMEA.

Looking ahead, Aon’s Williams said the outlook for this year is “broadly positive” for European buyers. But he stressed that the market is likely to continue moving in micro cycles and conceded there are potential clouds on the horizon.

“It is worth noting a trend that we think is here to stay. The insurance market no longer moves only in broad cycles, but rather moves increasingly in micro cycles that are more product, industry and geography-specific. Furthermore, we believe these micro markets are at different stages of their respective cycles,” he said.

“The prospect of economic headwinds arising from ongoing geopolitical events could cause some [insurance] companies to take a more conservative risk outlook in 2025. Additionally in 2025, we are carefully watching for further developments related to natural catastrophe-exposed property risks – particularly in the immediate aftermath of the California wildfires,” he added.

Zurich said the insurance industry must remain consistent in its approach to continue to provide a stable, reliable solution for customers. Toland called on the market to retain discipline in 2025.

“As an industry, we should not make the same mistakes of the past and chase top line over sustained profitability. The quality of our underwriting portfolios at an industry level needs to remain paramount, underwriters need to stay steadfast in their underwriting integrity and their commitment to risk selection… Data and analytics and deep risk insights are critical as we manage through the market,” he said.

Miller said its predictions for the next 12 months depend on specific product and industry sector dynamics.

Tobin said the transport market will depend on how geopolitical situations in Ukraine, the US and the Middle East play out. “It is highly likely the trade war will lead to a reduction in historical maritime flows and investments by maritime insurers, with a decrease in capacities offered. We also expect further softening in marine hull, while marine war depends on the changing dynamic of political conflicts,” he said.

The broker added that recent losses history have caused underwriters to reconsider their approach in the energy market and start to push for more steady rating movement on petro/refining business. “Expectations around a slowing down of downward trends are rife amongst the market; however, no specific reaction has been seen and we await the results of March renewals,” said Tobin.

He pointed out that while the non-cat European market for renewable energy assets is stable, most of the new capacity is not lead capacity, and so Miller doesn’t believe this market will soften significantly in 2025.

But it does expect further softening in the PI/E&O market. “However, we believe the rate of this softening will begin to slow down as claims begin to outstrip the relatively low premiums being charged on highly exposed practice areas,” said Tobin.

And Miller thinks the Spanish P&C market will stabilise over the next 12 months as “new” carriers, now in their second or third years of business, become less aggressive.

“The broker market also looks to be less volatile, which will help to drive market stability. The Spanish economy seems to be growing, which means buyers should be less concerned about cost and should be looking to consolidate their carrier relationships and improve coverage. Lastly, there is significant interest in accessing LATAM business from Spain, with many Spain-based brokers and carriers using Madrid for their LATAM hubs,” said Tobin.