UK Insurance Market Shifts to ‘Markedly Soft’ Phase
The UK insurance market has entered a significantly soft phase, with conditions in the first quarter of 2025 becoming increasingly advantageous for buyers, according to a new analysis by Aon. Insurance rates fell by an average of 11 to 20 percent across most classes of insurance, excluding motor cover where premiums continue to rise due to inflationary pressures in vehicle repairs and supply chains.
Aon’s analysis revealed that insurers are competing more aggressively on price and policy terms, aided by ample capacity and improved underwriting profitability. “The market has ample capacity, greater underwriting flexibility, and broader coverage offerings,” said Josh Webb, head of London broking for Aon’s Commercial Risk division. “This puts buyers in a strong position to revisit their overall risk strategy.”
Significant Rate Reductions Across Various Insurance Lines
The construction market, particularly traditional “four-walls” property risk, saw premiums drop by as much as 20 percent, supported by both established and new capacity. Professional indemnity (PI) and liability lines also experienced pronounced softening, with PI rates falling by 5 to 15 percent for large multinationals and up to 20 percent for mid-sized firms. Liability insurance recorded rate reductions of up to 25 percent for corporates.
“Insurers are aggressively chasing business,” said Mike Pearson, head of financial lines. “Terms are improving, exclusions are narrowing, and capacity is strong.” Long-term agreements are being increasingly offered as insurers seek to retain clients and grow market share.
Motor Insurance: A Different Trend
Motor fleet insurance bucked the trend to some extent, with rates still rising by 2.5 to 7.5 percent. Claims inflation, driven by parts and labor costs, remains a significant concern. However, Aon noted that well-managed fleets could achieve savings or renewal terms close to previous levels as insurers expand their appetite and face growing competitive pressure.
Property Insurance Rate Decline
Property insurance rates have also declined by 11 to 20 percent, with coverage widening and carriers offering flexible terms such as cancel-and-rewrite provisions. Helen Bailey, broking director, advised insureds to revisit policies cut during the hard market and ensure values and risk data are up to date for renewals.
Market Outlook and Advice for Insureds
The recent shift is largely attributed to improved financial results among insurers, with many reporting underwriting profits. These healthier positions are fueling growth plans and underwriting flexibility. Despite the favorable environment, Aon warned that macroeconomic and geopolitical volatility could temper insurer optimism in the medium term.
Aon’s leaders emphasized that early renewal engagement and robust risk presentations remain critical to securing optimal outcomes. Beyond price, insureds are encouraged to focus on strategic alignment with insurers, sustainable cover, and long-term value. “Chasing down the lowest price may not serve long-term objectives,” Webb concluded. “This is a moment to rethink the structure and breadth of your risk programme.”
