We'll obviously share some insights in terms of what we've seen during Q3, and equally, views and thoughts from a rest of year perspective in what we can expect from the market. Maybe I'll just keep the microphone and give some initial views and thoughts in terms of how we see the market in general.
It's fair to say the market in Western Europe continues to be a competitive environment across pretty much all lines of business, really driven by strong competition from incumbent carriers, working hard, aggressively to retain business, continued new entrants pushing hard to take market share. And we're really seeing that across pretty much all lines of business, all countries.
It's an excellent opportunity for buyers, for clients to really evaluate the program structures they have in place, the limits, the retentions, but equally to start looking at alternative options from a market point of view, so a really good buyer's market that we're seeing in Europe.
There are a few areas where perhaps carriers remain a little bit cautious. And you'll hear a little bit from Victor and Kiran in a second, but certainly on the secondary perils, that remains an area where there is capacity, and certainly not an issue in terms of any of shortfall from a capacity point of view. But carriers do remain a little bit cautious around secondary perils, supply chain, particularly BI-related exposures with the continued economic uncertainty putting pressure there.
So yeah, carriers do remain a little bit cautious in certain sectors, but overall, very competitive across the portfolio. Rate reductions can be seen pretty much in every sector, in every country of our business across Europe. So as I mentioned, certainly a buyer's market, good for clients. And certainly, we see that trend continuing overall in Western Europe for the rest of this year and probably into Q1 as well.
But maybe touching a little bit more specifically in the world of property, Victor, just turning to you to maybe share your observations for Q3 and maybe looking a little bit further ahead for the rest of this year from a property market perspective.
VICTOR DE JAGER: Yes, thanks, Nick. I think for the property market, I can echo a lot of things you already highlighted. So there is the softening trend continues and it seems to be even progressing even more. You see a lot of insurers being keen on new premium coming in and also on the retention level.
Because if the book goes down 10%, you need to grow 20% if your target is around that area. So that gives a lot of pressure on pricing as well, of course, this competition and also with the new capacity coming in.
Besides the pressure on pricing, I think there's also more flexibility around terms and conditions, which is also a positive sign. So it gives also clients the opportunity to renegotiate back certain limits, which they might have lost in the hard market. So that's really positive development for clients.
Areas of concern, you highlighted supply chain. I think the accumulation in that area still is a concern to insurers also to keep track of that. Another thing is, of course, the political environment, a lot of uncertainty around in the world. So if you also think about, for example, the tariffs, clients need to be aware of if there is an impact on their limits on that.
Is your policy limit still sufficient when you increase your revenues or your sales by 20% just because of tariff impact? So those things are really still in scope and need to be paid attention to. Also, of course, it's still an uncertain element. It's like the perils you mentioned.
But I do also see there, there is an opportunity to increase limits, or at least to assess your risk in a better way, so that markets have the confidence to provide that capacity still. So overall, I think the softening drives price terms and conditions.
There is still some discipline around certain elements which influence volatility in the portfolio. And the outlook is that this will keep on going for the Q4, Q1 as well, because the pressure to grow is still out there. And the competition is there, so a very positive market environment for clients, I would say.
NICK HOLMES: Great stuff.
NICK HOLMES: Thank you, Victor. And yeah, Kiran, from a casualty perspective, get your thoughts from Q3, and again, looking ahead from Q4 and maybe into 2026. Be great to get your thoughts.
KIRAN NAYEE: Thanks, Nick. So look, much like both yourself and Victor have said, across the whole market really, possibly with the exception of the US, which I'll come to in a minute, we're seeing significant rate declines as insurers are competing.
We see continued aggression from insurers, really, as they strive to meet year end. Casualty is seen as a profitable line of business and the underwriters are under pressure to effectively write more. And I think as we close in on year end, we're seeing increasingly desperate behavior from insurers as they try to close the gaps they have in their budgets.
And this is just accelerating the competition. And I think we're going to see increasingly aggressive behavior as we close in. So I think from a casualty point of view, this will be one of the most competitive quarters that we have seen for some time as the insurers realize and strive to get that premium income.
So from that point of view, a similar message, I think, to the property. What we're also seeing from insurers on the casualty side is an increasingly will to find facultative reinsurance solutions to manage their capacity, often avoiding treaty, again, in an effort to try and make sure they're putting out large capacities at the best possible price. So that's the point that the clients should bear in mind.
That said, there are still some areas of concern on the horizon. US risk exposures are continuing to cause a problem for insurers. And they're very, very careful about how they deploy their capacity. So I think for clients that have significant US exposures should certainly that will be a concern.
And then some of the non-core extensions, again, an area where insurers are looking to understand further about what those exposures are and the likes of professional indemnity and financial loss or recall, for example, where perhaps previously they've put out large limits on that, now they're looking to manage those exposures better. PFAS also remains an issue with insurers, so an area to look at. But in general, it is good news for buyers and it's difficult to see, at the moment, an end to this trend.
NICK HOLMES: Thank you, Kiran. Yeah, we touched upon a little bit, both of you, in terms of it is a buyer's market, good opportunity for clients. You touched upon a few examples, Victor, in terms of how this market can benefit clients and maybe what clients can or should be doing. So maybe an open question to both of you to maybe exapnd a little bit in terms of what this means for clients, what clients can do.
VICTOR DE JAGER: Yeah, so as I already said, Nick, it's a positive environment for a client. But that doesn't mean you can lose your attention to key elements. It's still important that there's a good focus on risk management and that you are able to explain your risk management philosophy to the market.
So indeed, the risk engineering elements focus is there, status of recommendation, but also important to align the strategy of the company to the insurance needs. So you still need to bring a good submission to the market to get the best result and that means you have to be well prepared, engage early, and of course, Willis is there to support.
We have our risk and analytics tools, which can also help on the various lines of business to get a clear idea on what you need to buy. So yeah, it's still like there's a lot of capacity, there's competition, but it's still about selling your risk to the market to get the best deal. And if you don't have all the details ready, then probably you won't get the best deal from the marketplace.
So Willis is definitely there to support and get the best submission across the line and also to negotiate the best deal out of the market. But there's still some discipline needed to get all the data there and get all the right elements in front of the marketplace to really get the maximum result and maximize the market's capabilities at the moment. So I think that's for property, probably similar to casualty, but I'll give over to Kiran to highlight a little bit on what's needed in the casualty market at the moment.
KIRAN NAYEE: Yes, thanks, Victor. And yes, it's a similar message. I think very much, we would encourage clients to be sellers of risk in their current environment. It's a case, look, we know that the market are giving price savings, we know we can do that. The question is how to optimize those savings, how to get the best options, and really, from a casualty and probably also from a property point of view, the key is providing options, generating competition against your incumbents.
And I would urge clients to use that environment to make sure the product they're buying is relevant, backed by good data. Good data is key. How can we work with the insurers to get the best possible terms? That's through data, whether it be good claims data, using analytics, good exposure data.
Insurers are looking to us at ways to try and help them get the best possible deal. So I think the more we can support them with data that they can put pressure on their own internal mechanisms, the better. So I think options for clients, use of the global marketplace, options by way of direct and facultative capacity to make sure that the programs that clients are buying are relevant and fit for purpose in terms of what they need.
And I think that absolutely goes hand in hand with price savings. I think it's, as I say, go back to where we started, it's definitely a buyer's market and clients should be making the most of that.
NICK HOLMES: Great, thank you very much, Kiran and Victor. And maybe just to touch upon a little bit, you mentioned the reference to relevance, Kiran. And I think that's certainly a statement when we're meeting with markets in this current competitive environment, as you guys have mentioned.
They're all hungry for business, both retaining risk, but equally from a new business point of view. And that whole topic of relevance, carriers equally need to have a clear relevance in terms of answering the question, why should a client move to, why should a client change their structure from a carrier perspective?
So we really need carriers to step up to the table, in effect, to have a clearer proposition, really understand the client's exposures, the client's needs, not just today, but in the future, understanding the industries that they operate in.
Carriers that have a greater relevance, a greater understanding, combined with better use of the analytics and the data exist will stand a better chance of being successful in this current marketplace. So, yes, certainly a key point. I think equally, I would just add as well, whilst it is clearly a buyer's market, we have at Willis our total market approach in really bringing together the country, the global, the international capabilities that we have to identify the markets, the capacities from around the world to support the needs of clients and to bring that competition.
However, something that we focus on very heavily is to ensure that we don't just follow the price. We don't want to select a certain carrier to then undermine the ability to service. And I think that's something we need to remain cautious to and aware of, that we don't want to undermine the ability from a claims perspective and particularly on multinational programs, that service delivery remains crucial and should remain at the forefront of everybody's mind when we're going through the current market cycle.
But with that, thank you everybody for listening and for joining our podcast. Please do reach out to myself, Victor, Kiran directly with any questions, comments, hopefully positive to share, and other ideas and thoughts that you'd like to hear from us.
Very, very happy to do so. And yeah, we look forward to sharing our Q4 podcast later this year. But thank you, everyone, for listening. And thank you, Kiran and Victor for joining. Thank you all.
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