UK market softening set to accelerate in 2025, says Aon

The UK commercial insurance market looks set to continuing softening in 2025, with further price reductions and the prospect of broader coverage, according to Aon. Remarketing accounts at renewal should produce better renewal outcomes, the broker said during the first of its new quarterly online briefings. Last year saw general softening across large areas of the UK commercial insurance market, according to Josh Webb, head of London Broking at Aon. “2024 was a very interesting year across the UK insurance market. Really a year of transition,” he said. Following a prolonged period of price increases and underwriting discipline, favourable conditions spread across the UK market in 2024, explained Webb. The main exception was motor, where underwriting discipline and the uptick in rate was very much visible, even at year-end renewals, he said. “In terms of 2025, we expect buyer-friendly conditions that we saw build momentum through the course of last year to continue in large areas of the UK insurance market, if not accelerate,” he said. The “broadly softening conditions” in the UK insurance market are being driven by strong insurer results, positive 1/1 reinsurance renewals and increased competition, explained Webb. “We have seen capacity continue to grow over the past 12 months, and that is from both long-term existing insurers in the UK marketplace and from new entrants looking to expand into the UK. All of which is driving competition, and that improved outcome for our clients. Growth targets are probably the standout feature of last year, and already this year,” he said. However, there are “pockets of challenge”, such as UK motor, but these are starting to ease, according to Webb. The UK property insurance market began to stabilise in 2024, with significant softening in some areas as competition returned, according to Aon. “There is a positive picture overall, and we definitely expect that to continue into 2025. Competition is healthy and capacity is abundant, and we see insurers push for larger shares on existing business. There is also a willingness to write new business, which was certainly not the case even a year ago. There was quite a change during 2024,” said Helen Bailey, broking director for property at Aon. Extreme weather events in 2024 failed to “move the dial” in the property market, according to Bailey “Following positive treaty reinsurance renewals, a lot of insurers have ambitious growth plans for 2025. So we do anticipate a softening of market conditions through the course of this year – that is without economic or nat cat loss trends. That is the key area where things could change, but even so they would have to be very major to change the course of the market,” she said. But difficult risks, like the waste sector, loss-affected accounts, and those with perceived “poor risk management” will find renewals challenging, even in softening conditions, she added. “We are seeing the best results where we are remarketing. So stirring up competition and creating that tension – that is where we are getting the very best results for clients. If you haven’t done it for a while and you are thinking about it, definitely talk to your broker about a remarketing strategy, certainly as we look into 2025,” she said. In addition to rate reductions, UK insurance buyers may start to see broader coverage offered in 2025, according to Bailey. “The area where we have not seen much change in the course of 2024 is cover broadening. We saw bits of it in places, but we expect this may come in 2025 where insurers try to differentiate themselves, especially from a lead perspective. So cover may be offered that is broader compared with others,” she said. Some UK companies are using premium savings to buy additional limits at no additional cost, noted Bailey. “Ask the question. It’s the right market place for it, as insurers compete to retain existing business and grow their book into new business,” she added. Despite the softening market, favourable renewal outcomes are still dependent on the risk profile and quality of risk management, and the submission at renewal, according to Aon. “A feature we have seen in 2024, and we expect to continue, is significant variation in outcomes and renewal results across the market. It is driven by a number of reasons – insurance class, certainly, but also by client segment. There is variation in appetite and therefore competition in certain areas of the UK market,” said Webb. “Another area we are seeing variation is in terms of general approach to renewal strategy and how well that is executed. That is a key route to outperforming general market conditions in the current market environment,” he added. Insurers are also increasingly prepared to offer long-term agreements (LTA's) with flat or reduced pricing in subsequent years. LTA's can offer buyers improved budget certainty, the protection of cover and guaranteed insurer capacity over a multi-year period. It also allows companies to focus on projects over a longer period, as renewals should be lighter, explained Bailey. "This is definitely a discussion we are having with lots of clients at the moment. Our recommendation would depend on what your priorities are, your loss record performance and approach to risk," she said.

UK market softening set to accelerate in 2025, says Aon

Remarketing accounts paying dividends

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