With a specialized focus on AI-driven risk assessment, Simon Glairy is a leading voice in the insurance and Insurtech sectors. Today, he joins us to dissect the dramatic shift in the global commercial insurance market. After seven years of relentless rate hikes, the industry is now in its sixth consecutive quarter of decline, creating what many call a rare but fleeting opportunity for buyers. We will explore the macroeconomic forces fueling this reversal, the striking regional disparities in rate changes, and why the casualty market is stubbornly bucking the softening trend. Simon will also offer his strategic playbook for risk managers looking to capitalize on this unique market moment before the window closes.
Following a seven-year hard market, we have now seen six consecutive quarters of decreasing commercial insurance rates. What primary factors, such as interest rates and market capacity, are driving this reversal, and how has this impacted underwriting profitability and competition among insurers? Please provide some specific metrics.
It’s a complete turnaround from the environment we were in just two years ago. For seven long years, starting around 2018, the market was gripped by what I call a “quadruple threat”: relentless economic and social inflation, a punishing series of natural catastrophe losses, and reinsurance capacity that became incredibly tight, especially after Hurricane Ian. That combination drove rates skyward. What we’re seeing now is the unwinding of those pressures. Higher interest rates have improved insurer investment returns, taking some of the pressure off pure underwriting results. We’ve also seen a period of reduced major loss activity globally, which provides much-needed breathing room. This has, in turn, attracted new capital back into the market, significantly increasing capacity and forcing insurers to compete more aggressively on price. The result is what we see in the Q4 2025 numbers: a global average rate decrease of 4%, marking the sixth straight quarter of this softening trend.
The Pacific region saw property rates fall 14% while the overall US market remained flat. What underlying risk factors and market dynamics explain such a stark divergence between these regions? Please walk us through the key differences you are seeing on the ground in these markets.
That divergence is one of the most interesting stories in the current market. A 14% drop in the Pacific versus a flat market in the US is a massive gap, and it speaks to how localized risk perception has become. While the global drivers I mentioned—like increased capacity—are benefiting all regions, the on-the-ground reality is very different. The Pacific region’s dramatic property rate decrease suggests that it has experienced a significant reprieve from the large-scale catastrophe losses that previously plagued it, allowing the market to rebalance quickly. Insurers there are clearly feeling confident enough to compete fiercely on price. The US, on the other hand, remains a tougher environment. While it isn’t seeing broad rate increases in property, the market is holding steady. This indicates that insurers are still cautious, likely due to the continued threat of severe convective storms, wildfires, and the lingering financial impact of past hurricane seasons. The US market simply has a different memory of recent losses, and that is keeping the pricing environment much more disciplined.
While property and cyber insurance rates are declining, global casualty rates rose 4%, driven by a 9% jump in the US. What specific loss trends and social inflation concerns are fueling this exception, and what practical strategies can risk managers employ to mitigate these rising casualty costs?
Casualty is the outlier, the one line of business that hasn’t gotten the soft market memo, particularly in the United States. That 9% jump in the US is a direct reflection of deep-seated insurer anxiety about social inflation. We are continuing to see an alarming frequency of massive jury awards, often far exceeding historical norms, in liability cases. This trend, often called “nuclear verdicts,” makes it incredibly difficult for underwriters to predict future losses with any confidence, so they are building significant risk premiums into their pricing. For risk managers, this is a major challenge. You can’t just rely on the market to give you a better deal. Instead, you have to proactively manage your risk profile. This means demonstrating best-in-class safety protocols, having a robust claims management process, and being able to tell a compelling story about your company’s commitment to risk mitigation. In this environment, you have to prove you are a better risk than your peers to avoid being hit with the worst of these rate increases.
Several analysts describe this period as a “rare” but “limited window” for insurance buyers. For clients in softening lines like cyber or financial, what does an ideal renewal strategy look like? Please outline the step-by-step process for becoming positioned as a “preferred risk” to insurers.
The “limited window” analogy is perfect because this level of market softness won’t last forever. For clients in rapidly softening lines like cyber, where we saw rates fall 7% globally, the opportunity is immense. An ideal strategy begins much earlier than usual—I recommend starting the renewal planning process at least 60 to 90 days out. First, you need to meticulously prepare your submission. This isn’t just about data; it’s about narrative. You have to clearly articulate your risk management posture, detailing the controls, technologies, and procedures you have in place. Second, you must get your submission to the market early. This allows you to set the terms of the negotiation and signals to underwriters that you are a well-prepared, organized risk. By doing this, you position yourself as a “preferred risk,” which is exactly what it sounds like—an account that every insurer wants on their books. This creates a competitive dynamic where carriers are not just bidding for your business on price, but are also more willing to offer broader terms and more favorable conditions.
What is your forecast for the global commercial insurance market heading into 2027?
My forecast is one of increasing fragmentation and volatility. While I expect this buyer-friendly window to remain open through 2026, the underlying pressures that created the last hard market haven’t disappeared. Macro-level risks like persistent inflation, geopolitical instability, and the undeniable trend of increasing climate-related catastrophe losses are still simmering beneath the surface. I believe we will start to see conditions become much more varied by late 2026 and into 2027. Some lines, like US casualty, may remain hard, while others that are soft now could see a rapid reversal if a major catastrophe or economic event shifts sentiment. The era of broad, uniform market cycles is likely over. Instead, risk managers will need to navigate a complex patchwork of micro-cycles that vary by region, industry, and line of coverage. The key will be agility and deep market intelligence.
