A soft market “under stress”, buyers opportunity may be short-lived: Aon

Today’s soft market across insurance may be short-lived, as the global environment is volatile and systemic risks are rising, which means the opportunity for protection buyers may also not last, according to broker Aon.

In its latest Global Insurance Market Insights report, Aon explains that the soft market across insurance presents a unique and perhaps short-lived opportunity for protection buyers.

While the report is focused on insurance, the commentary reads-across to reinsurance capital as well, given the same global and systemic factors are also influences to the pricing cycle there as well.

“Today’s market presents a unique, though perhaps temporary, window of opportunity for insurance buyers,” explained Joe Peiser, CEO of Commercial Risk for Aon.

“We’re seeing increased capacity, improving terms and competitive pricing across many lines. However, what makes this moment truly distinct is the backdrop: a deeply interconnected risk environment where geopolitical tensions, climate volatility, cyber threats and infrastructure vulnerabilities are all intensifying,” Peiser continued.

Peiser went on to say that, “This is not a typical soft market cycle; it’s a soft market under stress. That means organizations need to think and act strategically — leveraging favorable conditions to strengthen their programs, optimize capital and build resilience for what comes next. At Aon, we’re helping clients move beyond transactional buying toward a total cost of risk mindset, so they can make better long-term decisions and navigate volatility with greater confidence.”

US casualty, property and cyber lines of insurance are all showing ongoing deterioration in underlying loss activity, Aon notes.

While with only a “fairly limited” influx of new capital coming into insurance and reinsurance at this time, the sector may be exposed to rapid shifts in appetite if a major event occurs, the broker added.

As a result, Aon sees the current market environment as a “strategi window” for protection buyers.

Aon’s report highlights stresses, such as geopolitical instability, climate volatility, cyber fragility, infrastructure vulnerability, and supply chain disruption.

As a result, the broker concludes, “The contradiction is striking: this is not a typical softening market, but one marked by mounting stress from systemic volatility.”

Buyers are being strategic as well, with a shift towards both weather and supply-chain linked parametric covers noted by Aon, especially in energy, agriculture and infrastructure.

But with most insurance and reinsurance markets seeing higher capacity levels at this time, pricing has been competitive and terms a little more flexible.

All of which means Aon is effectively urging clients to take advantage of this moment, as it seems the broker does not believe the current softer market conditions will last for an especially long time.