Insurance Marketplace Realities 2025

Across any business there are always going to be periods of revolution that are vital to your long-term success. And as many readers of Insurance Marketplace Realities likely know, there was an unmet desire in the risk management community that served as WTW’s catalyst towards revolution in 2022 and 2023 – most notably in the development and rollout of our industry specialization strategy. But while continuous growth is necessary, revolution is not a sustainable state in which to operate. Periods of big change must give way to longer periods of incremental change, where the business can settle into the new way of doing things and find new ways to grow. In other words, revolution breaks the ground, but evolution paves the way toward longer-term goals.

Reflecting on 2024, the year could be characterized as one of evolution for WTW North America – incrementally building on the foundation we established over the previous two years. Consider our exclusive new excess liability policy, or the ongoing digitization of our broking platform, or the development and launch of a new client treaty, Client Edge Facility, that creates dedicated property capacity for our clients. All are practical, carefully calibrated moves to further establish and develop our offerings, but they also demonstrate evolution of a broader strategy.

This theme of “evolution not revolution” is also discernible across the market. The industry has not categorically rewritten their position on any one line of business, but rather has taken micro-actions reacting to emerging trends. In property, the reinsurance community continues to bring capital back into first-party business and is even showing an expanded appetite through vehicles like Insurance Linked Securities (ILS) for CAT-exposed risk. The result has led to a demonstrable improvement in both the reinsurance and retail markets. It goes without saying that this state of affairs might only be one major hurricane away from being upended, which with Milton knocking on the door, the probability of disruption is growing.

The cyber and financial markets also remain relatively soft. Capital and capacity are both abundant in these markets but we’re beginning to see the market take a discernible look at financial lines mid-excess layers. Whereas capacity, be it from brick-and-mortar insurers or newly formed MGAs, once rushed into the excess towers, there is mounting trepidation for excess layers attaching between $20 million and $100 million. Insurers are questioning rate adequacy and ILFs more now than in the recent past.

Risk itself is not absolved from evolutionary change. The casualty marketplace demonstrates this powerfully. Not many risk managers or underwriters were talking about PFAs and forever chemicals ten years ago. Now, Praedicat is predicting this could become an $80 billion issue for both insurers and insureds, with a 1% chance that the total expense could exceed $200 billion. Unsurprisingly, this news – not to mention the ongoing pressures of social inflation – is driving a view in the sector that liability lines will not be enjoying a soft market any time soon. Whilst a return to 2020’s rate and capacity challenges is not expected, tougher conditions are widely seen as probable.

Evolution is also visible in the pages of Insurance Marketplace Realities, and this edition sees the debut of our View from the Top interview section. Our first guest is Mo Tooker, Head of Commercial Lines at The Hartford. We’re sure you will enjoy Mo’s insights into the state of the market, evolving capital distribution, and where digitization is taking the industry. Do let us know what you think, as our plan is to make View from the Top a permanent fixture in future issues.

Change may well be the only constant in our business. Risk is evolving, the industry is evolving, and therefore our approach needs to keep evolving, too. From new, specialization-focused client engagement strategies to tighter underwriting conditions in casualty – all the way down to new sections in Insurance Marketplace Realities – every one of these evolutions is welcome evidence of our ongoing drive towards constant adaptation. For those navigating these winds of change, we hope this latest edition of Insurance Marketplace Realities helps you chart your course with confidence.

For more insight on how you can prepare for a challenging marketplace, contact your local WTW representative.

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