Global Insurance Rates Decline: Insights and Implications

Global Insurance Rates Show Decline Amid Varied Regional Patterns

Global insurance rates fell by 4% in Q4 2025, marking the sixth consecutive quarter of decreases, according to the Marsh Global Insurance Market Index. This dip stems from increased insurer capacity, spurred by reinsurance sector expansions and new market entrants. As a result, heightened competition has prompted carriers to offer favorable terms, broader coverage, and reduced premiums to retain and attract clients.

Despite the global decline, the US market remained stable with unchanged rates, following a previous 1% reduction. Conversely, the Pacific region experienced the most notable composite rate decrease, with a staggering 12% decline. These regional differences highlight diverse regulatory compliance requirements and competitive dynamics affecting insurance markets worldwide.

Various product lines saw differing levels of rate relief, notably in property and cyber insurance. Globally, property insurance rates dropped by 9%, with the Pacific seeing a 14% decrease. In contrast, financial and professional lines experienced a 4% decrease, showing stability in the US, while cyber insurance rates fell by 7% globally.

US Casualty and Risk Management Challenges

US Casualty remains challenging for risk managers due to a litigious environment and significant jury awards, causing a 9% rate increase in Q4. Although new capacity exists in the US excess casualty market, demand continues to outstrip supply. This imbalance results in more pronounced rate increases in excess layers compared to primary lines, highlighting ongoing challenges in the underwriting process.

John Donnelly, President of Global Placement, noted, "While US composite rates were flat, other regions saw sharper declines." As market dynamics shift, organizations with robust risk profiles negotiate better terms and explore alternative risk transfer solutions, such as self-insurance and captives. However, the growing use of captives may increase exposure to large loss events.

The competitive and evolving market enables policyholders to benefit from reduced rates and improved terms. With competition among insurers potentially escalating, driven by AI-driven cost reductions and lower reinsurance expenses, global rates could continue on a downward trajectory, barring significant catastrophic losses.