And I'm delighted to be joined today by Laura Shipton, Director, North American Property. Louise Dorrian, Head of Product Recall. Sonja Wild, Senior Broker and Team Leader within the North American Casualty Team. It's great to see you all again. Good to be back.
I'm looking forward to another insightful chat about our marketplaces. Last time we had some really good conversations around rating environments, new market entrants, what's been driving market challenges for us all.
And so I guess the first thing that would be great to hear from you all is how are things now that we're five or six months further on? Laura, last time we caught up, Kim talked us through the move to a soft market environment in North America property, which I think has really developed lately. But how much softer has the market gotten?
LAURA SHIPTON: Yes, well, at the start of the year, Kim rightly highlighted the rapidly softening North American market. Since then, pressure on rates has definitely further intensified and the decline has far exceeded our expectations.
With hurricane season remaining quiet and no market turning event in sight, insurers continue to face reduced income from falling premiums and shrinking orders. A steady influx of aggressive capacity from both global players and competitive facilities has only highlighted the challenge of winning new business, making client retention more critical than ever.
As we approach the end of the year, the likelihood of missed budgets is adding further strain as some markets look to write for income. And looking ahead, the big question is 2026. The challenge for insurers is, how do you plan for the future when the market shows no sign of stabilizing?
KIRSTEN MONAHAN: OK. It sounds like the pressure on rates is really only going to keep intensifying. And as you rightly point out, looking ahead to '26, it feels like the big challenge will be figuring out how to build resilience when the market just doesn't seem to be stabilizing anytime soon.
And Louise and Sonja are the product recall or North American casualty markets? I mean, it would be great to hear a comparative on the competitive dynamics that you're experiencing as well. Are things at least a little bit more stable?
LOUISE DORRIAN: Yeah. So while the product recall market has remained relatively stable since we last spoke, there are a few key areas worth highlighting. Mainly, the abundance of capacity that we're seeing and a broadening of underwriting appetite, with insurers now willing to offer terms for niche products and industries that were previously considered challenging.
The US market continues to set the pace, with coverage enhancements increasingly offered as standard. This, in turn, is prompting the London market to adapt in order to remain competitive and retain business. With another new entrant set to join the London product recall market later this year, we anticipate that the current buyer's market conditions will continue for the foreseeable.
SONJA WILDE: I would say the US casualty market has also held relatively steady since we last caught up. In that, insurers are still being cautious and selective with capacity. We've seen a few more new entrants, but I wouldn't say that this has put any downward pressure on rate or terms. US casualty is still very much in a hard market.
Although, this welcome additional capacity alongside the launch of Gemini has helped relieve some pressure. A notable trend would be an increased use of alternative structures in placements in response to those rising costs and capacity constraints.
So use of quota share retentions, swing plans, captive layering, buffer layers, first loss corridors. They're providing carriers' clients with more control over how they deploy capital, and some flexibility in where they want to retain versus transfer risk.
And then with the list of emerging risk continuing to grow, a dynamic, forward-thinking approach to program design is more important than ever. And it's essential that we, as brokers, are constantly evaluating products and terms to ensure that they're still relevant.
KIRSTEN MONAHAN: Some real challenges are still being faced at the moment then, whether it be pricing, capacity or changing landscapes that brokers and insurers are continually having to adapt to. It's funny you mentioned emerging risks at the end there.
What do you think are the key emerging risks for US casualty at the moment? And are there any specifically that our clients should be keeping a watchful eye on?
SONJA WILDE: There are several which have drawn sustained attention for some time now. So PFAS, biometrics, microplastics, opioids. But one of the more pressing trends in US casualty is coverage for sexual abuse and molestation liability, or SML.
Insurers are adding restrictive terms. They're raising retentions or even excluding SML entirely in response to heightened exposures, particularly in the healthcare, education, and hospitality sectors. And it's all being compounded by legislative changes to the statute of limitations for SML claims.
Social media is also emerging as a key risk area, with retailers seeing more claims relating to what they post online, including how they advertise on social platforms. And this is triggering both personal and advertising injury claims.
Courts are also increasingly examining whether social media platforms contribute to addiction or harm through their algorithms-- the algorithms that they're using. And cases involving intellectual property and reputational damage are on the rise.
And then, alongside social media, AI is also driving new exposures, particularly through tools like chatbots, where legal risks are emerging around how those technologies interact with customers and the content that they're generating.
So as AI becomes more integrated into marketing and customer services, clients and insurers are watching closely for liability issues tied to misinformation, discrimination, or any unintended harm.
KIRSTEN MONAHAN: I think you're spot on with the recent new challenges to our marketplace. And there's always more to add to the list for US casualty such as active assailant, data privacy, aging infrastructure. And with the third-party nature liability of liability insurance, external factors are always so impactful. But coming back to North American property, again, Laura, I recall last year that property and valuations have become a hot topic and that these have led some larger claims valuations than anticipated. How have you seen this impact the current marketplace given its soft standing right now?
LAURA SHIPTON: Yes. Well, as you can imagine, the conversations which dominated the property market just a year ago feel like a distant memory. We were still debating valuation methodology and negotiating margin clauses off all of our placements. But today, that topic has virtually disappeared.
The competition for premium has become so fierce that the focus has shifted entirely. Markets are now doing whatever they can to hold on to their renewal books. That means writing longer layers to compete with domestic capacity, offering higher catastrophe limits, and being creative with deductible structures.
I expect that this will set the stage for new discussions as attritional losses start to creep up. Those smaller, more frequent claims definitely hurt. And these are almost certain to become a much bigger part of the conversation in the months ahead.
LOUISE DORRIAN: Interesting you mentioned catastrophe limits, Laura, as a key area of focus for us in the product recall space, is ensuring policy limits remain adequate. We're seeing our clients increasingly open to discussing the potential impact of a severe incident on their business, leading them to review their existing limits.
In many cases, it's becoming clear that the limits, which have remained unchanged for years, may no longer provide sufficient protection against today's catastrophic scenarios. We've been able to utilize the capabilities of our internal analytics teams to assist with many of these reviews.
With the market as competitive as it is right now, these strategic policy limit reviews have assisted us in being able to secure increased policy limits for our clients with minimal impact on their premiums.
KIRSTEN MONAGHAN:OK. It's great for our clients that the stock market is providing such an opportunity to really consider the total limits that they're buying, and how they can develop their programs to ensure that they really remain relevant against potential loss values.
But, softer markets really pose a different way of broking, and I think there's often a perception that it's just an easy market for us, which as experienced brokers here, I think we realize that it's not really the case.
After a fairly long period in hard market, our teams have naturally changed and grown over the past few years. And I think we have a number of brokers now who are relatively early in their career journey. A soft market is a completely new experience for them. Laura and Louise, do you see this creating challenges? And based on your own experiences of breaking in a soft market, how do you support them?
LAURA SHIPTON: Well, I've worked through many cycles, and I'm lucky to work alongside a team with such deep experience. Steve Furman, for example, has 57 years under his belt, and that kind of experience in the team is invaluable. Because the soft market isn't just about reducing premiums, it's about knowing how to navigate these conditions with skill and strategy.
Experienced brokers-- they definitely understand how to structure deals creatively, building trust when everybody's chasing the same accounts and preparing clients for the inevitable turn in the cycle. For newer brokers, this soft market environment can feel unfamiliar, especially for those who started during the COVID years.
In a soft market, those in-person conversations really matter, and they require a very different skill set. And that's why we encourage our younger team members to lean into the experience around them. Watch how the seasoned brokers handle renewals, tough negotiations, and fly conversations.
Because in this market, it's not just about price, it's about service, and responsiveness and truly understanding client needs. Bringing in well-prepared submissions and having realistic expectations is how you build a reputation that lasts. So that when the market turns, it's the professionals who have built the relationships and credibility, you come out ahead.
LOUISE DORRIAN: I fully agree, Laura. It often takes time for those new to broking to truly grasp the value of strong relationships within the market. Staying honest and consistently acting in the best interests of clients, regardless of where we are in the market cycle, is absolutely key to success as a broker.
For us in product recall, a soft market not only means ample capacity and rate reductions, but also presents an ideal opportunity for new entrants to access coverage. As a non-compulsory class of business, we often find that in a harder market, our clients tend to self-insure, increase their retentions, or scale back the limits they purchase.
Given the current soft market environment, it's essential that our junior brokers proactively engage with underwriters to secure the broad coverage enhancements and negotiate long-term agreements wherever possible. This ensures that we maximize value for our clients whilst also strengthening our market relationships.
KIRSTEN MONAHAN: Absolutely. I think you've both made some great points. Experience is everything in a soft market. And it can really set apart the great brokers. Louise, I love your point about the soft market opening the door for coverage improvements as well.
This really applies across all lines and can truly make such a difference. It's all about balancing client needs with smart negotiation to come out stronger when the market shifts. Laura, Louise, Sonya thank you for your contribution on this episode of The Marketplace Insights Podcast. See you in the next one.
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