Aon report: Insurance market enters ‘soft’ cycle
Increased capacity and flexibility improve conditions for buyers.
This year will bring more opportunities for insurance discounts as the market continues to transition from a hard to a soft cycle following a prolonged period of widespread price increases and capacity restrictions, a new report shows.
The past year saw a pronounced shift toward buyer-friendly conditions, with insurers growing steadily more confident and focused on targeted growth, according to Aon’s Q4 2024 Global Insurance Market Insights Report.
“During 2022 and 2023, there was a restructuring that expanded capacity and flexibility in the reinsurance market, and many of the catastrophic losses that occurred last year remained with local insurers and didn’t affect reinsurers,” Karla Ruiz, commercial director for Aon in Puerto Rico, told News is my Business.
“In 2024, we started seeing more stability and favorable changes for clients, and now, in 2025, we’re seeing a more flexible market and more opportunities for clients to negotiate better terms and conditions, including good reductions in premiums,” she said, noting that some companies already are enjoying double-digit discounts.
Despite challenges posed by exposure stemming from natural disasters such as hurricanes and earthquakes, rates in Puerto Rico already are at profitable and sustainable levels thanks to a greater interest in the global market to take on more capacity, Ruiz said.
“This year, we expect to see greater capacity and slight reductions and discounts for accounts that are considered attractive,” she added.
“Rates are falling slightly, especially for companies that are attractive for these markets, mostly those with high limits and high premiums,” she said.
Insurance premiums are more favorable now because risks have been diluted in different products, especially cybersecurity, property, and directors and officers (D&O) policies, Ruiz explained. These changes will especially benefit attractive accounts — those of significant size that are profitable and have a high volume of premiums, many insured limits, and sound risk management and business continuity plans.
“For example, clients in the hospitality industry that have values over $100 million and those in manufacturing that have more than $250 million in values or that pay more than $5 million in premiums will benefit more from these rates. These companies will definitely see an impact in cost, as long as their insurance brokers do their jobs correctly,” she said.
Discounts will also depend on the type of industry, operation, location, capacity and exposure — all of which can support or limit a client.
Technology, too, will play a role in discounts, Ruiz said. Using the latest tech tools, insurance brokers can access the data they need to make better decisions, manage their clients’ risks and modify their insurance plans when necessary.
“Obviously, we’re still in a period of great volatility and uncertainty as we continue to have challenges in the market because of climate change, inflation, cyber threats and the fact that we live in a litigious society,” she said.
Ruiz listed several areas of opportunities for companies that wish to benefit from the softening insurance market, including maintaining robust business continuity plans, evaluating their probable maximum loss (PML), keeping their appraisals up to date, conducting captive feasibility studies and considering parametric insurance to support traditional insurance strategies.
Global insurance market insights
Despite another active year for natural catastrophe losses, conditions in the property market continued to ease in the final quarter of 2024, with increasing capacity and underwriting flexibility for well-performing, preferred risk types, Aon reported.
In Latin America, fourth-quarter insurance market pricing showed reductions between 1% and 10%. Capacity was ample, underwriting was flexible, and limits, deductibles and coverages were flat.
In the U.S., automobile and excess liability lines remained challenging, while property market conditions continued to improve, and cyber and D&O insurance continued to benefit from healthy competition.
Pricing varied widely by product category, with rates increasing in the auto and casualty/liability lines, while the property segment saw more favorable pricing. Cyber insurance saw modest rate reductions, while reductions were decelerating in D&O coverage, Aon reported.
