Buyer-friendly conditions generally continued in Q2, with organizations taking advantage of the market environment by reinvesting savings into program enhancements and loss control measures to strengthen long-term resilience.
Key Takeaways
- Favorable Q2 market conditions offer opportunities to enhance coverage and leverage diverse risk capital solutions to strengthen resilience.
- Geopolitical and systemic risks are escalating, impacting global trade dynamics and insurance markets, necessitating proactive risk management strategies.
- Climate and cyber threats are testing resilience; closing the cyber insurance gap is crucial for navigating evolving risks.
At the midpoint of 2025, organizations are contending with a risk landscape that is both fast-moving and deeply interconnected. From geopolitical uncertainty to climate volatility and digital disruption, the sources of uncertainty are multiplying, and so are the opportunities for those prepared to act. In the context of this environment, this report is designed to help you navigate emerging risks, capitalize on market conditions, and make better decisions with confidence.
Among the most salient drivers of the Q2 market are geopolitical and systemic risk, as well as climate, cyber and infrastructure threats.
Geopolitical and systemic risk
At the time of writing, the deadline for reciprocal tariffs is quickly approaching, and is expected to have significant implications for price inflation, supply chains, and global trade dynamics. Meanwhile, the turbulent geopolitical environment in the Middle East serves as a stark reminder of the speed at which such events can escalate and the very real implications they carry for risk and insurance. The ongoing Russia-Ukraine war is a case in point: A U.K. court decision in June on coverage for aircraft stranded in Russia due to sanctions will have ramifications for the aviation war risk market as insurers come under pressure to recoup losses and settle similar claims.
Climate, cyber and infrastructure threats
Extreme weather, nuclear verdicts and large supply chain events continue to test resilience. The widespread power outage that affected Spain and Portugal in April is just one example that highlighted the vulnerability of critical infrastructure. At the same time, cyber risk is accelerating and the impact of Artificial Intelligence bringing both risks and rewards is just beginning. Yet cyber remains significantly underinsured. Closing the cyber insurance gap and helping firms navigate this evolving risk remains one of the industry’s most urgent and strategic imperatives.
Market conditions create a window of opportunity
Despite this volatility, Q2 brought favorable conditions across most (re)insurance markets. The second quarter of 2025 saw a broadening of insurer appetite, with most geographies and lines of business benefiting from ample capacity and healthy competition. Property pricing continues to improve, with double-digit price reductions increasingly available, especially on preferred occupancies and those with good loss records. Directors and officers and cyber markets remain soft, and non-U.S. exposed casualty is stable and competitive. However, insurers continue to differentiate and placements with significant U.S. casualty exposure, automobile and certain natural catastrophe perils remain challenging.
Notable market conditions
- Conditions in the property market continue to improve, with more flexibility around coverage and terms, as well as increasing appetite for natural catastrophe risks. (However, we note that the year began with the California wildfires, “secondary peril” losses have continued unabated, and we are in the early weeks of the Atlantic hurricane season.)
- U.S. casualty and automobile remain challenging due to adverse claims trends, but capacity continues to be broadly responsive to demand, and options are available to buyers, albeit at higher rates and attachment points.
- Competition for directors and officers and cyber increasingly presents opportunities for clients to enhance coverage and increase limits.
- Development of broker-organized facilities, like the Aon Client Treaty (ACT), continues, especially in the London Market.
Strategic levers for clients
Now is the time for clients to take advantage of market conditions. In today’s competitive market, clients will find that insurers are more flexible on terms, and more willing to engage with insureds on enhancements to coverages, limits and attachment points.
At the same time, the diversity of capital and products available to clients continues to expand, with many buyers exploring a combination of captives, parametric triggers, structured and facultative solutions alongside traditional risk transfer. Aon continues to help clients shift from a transactional mindset to a total cost of risk approach, leveraging analytics, alternative capital, and advisory services to manage volatility and unlock strategic value.
Looking ahead
While current market conditions are favorable, they are also fragile and likely to be temporary. The systemic change in loss activity across property, cyber and U.S. casualty continues. Also, there has been fairly limited new capital coming into the traditional (re)insurance market. Large or surprising loss events, in tandem with geopolitical or financial market volatility, could affect a rapid change in insurer appetite for certain risks. Reviewing insurance strategies with this in mind, and considering a wide range of risk capital, will put buyers in a strong position to weather any potential future storms.