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Navigating a soft market

Global insurance pricing continues to soften, with competition and capacity driving downward trends across regions. Omar Gemei of Marsh unpacks what this means for insurers, brokers, and clients.
Written by
Omar Gemei
Published on
September 18, 2025
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The latest Marsh Global Insurance Market Index for Q2 revealed a 4% decline in commercial insurance pricing worldwide, the fourth consecutive quarter of decreases.

For our region, IMEA, the trend was even more pronounced with average declines of around 5%. Understanding what drives these shifts, and whether they are sustainable, is key for brokers, insurers, and clients alike.

Competition and capacity driving the decline

The main forces behind the current soft market are increased competition and greater market capacity. More insurers are writing more business, often at larger limits than before, which has created an oversupply of insurance capital. As a result, underwriters are competing aggressively for positions on large programmes and complex slips.

This dynamic is classic supply and demand: with more capacity chasing the same or even reduced demand, prices fall. For clients, this is translating into more favourable pricing, terms, and conditions. Importantly, because this is the fourth quarter in a row of declines, we believe it reflects a clear trend rather than an anomaly. Barring a major market-shaping catastrophe, such as a Gulf of Mexico windstorm, we expect these soft conditions to persist well into 2025.

Unique trends in South Africa - South Africa mirrors the regional picture, with average rate reductions of 4–5%. However, large, well risk-managed clients have been able to secure even greater savings. A significant factor here is the influence of the London wholesale market, which actively competes with local insurers for South African business. This cross-border competition has intensified downward pricing pressure.

Another trend in South Africa is the rise of subscription-based placements. Unlike the varied participations of the hard market, where insurers took on different retentions or structures, today more participants are following the lead insurer on consistent terms and pricing. This brings greater simplicity and fairness for clients, ensuring programmes are aligned across all participants.

Casualty bucking the trend - One area where pricing did not decline is casualty. Globally, casualty rose by 4%, driven largely by the US market where social inflation, higher frequency and severity of claims, and so-called “nuclear jury awards” continue to challenge insurers.

In contrast, casualty rates in IMEA, including South Africa, have remained flat. This highlights the relative resilience and stability of our region’s claims environment. The absence of excessive litigation pressures makes casualty cover more predictable locally than in markets like the US.

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"In South Africa, cyber insurance rates declined by about 5% in Q2, driven by new capacity and insurers’ greater confidence in underwriting this risk."

Omar Gemei
Bowring Marsh

Alternative risk financing on the rise - As clients look beyond traditional insurance, alternative risk financing (ARF) continues to grow. Captives, once seen as niche, are increasingly mainstream, particularly as companies in the Middle East expand globally and take a more sophisticated approach to risk.

By retaining more risk through captives or self-insurance, companies can reduce their total cost of risk, strengthen negotiating positions with insurers, and tailor programmes to their exact needs. This trend aligns well with Marsh’s full suite of capabilities, combining risk engineering, global placement, and advisory support through Marsh McLennan’s wider network of specialists.

Cyber: Systemic risk and new capacity - No discussion of today’s insurance landscape is complete without cyber. It remains one of the most systemic risks facing businesses. Interestingly, while exposures are growing, pricing is coming down. In South Africa, cyber insurance rates declined by about 5% in Q2, driven by new capacity and insurers’ greater confidence in underwriting this risk.

A few years ago, underwriting cyber was a challenge. But today, after years of experience and data collection, underwriters are more comfortable pricing and structuring cover. More insurers are writing primary layers and offering higher limits, creating a more competitive marketplace.

For South African businesses, this is an opportune time to review cyber programmes, seek broader coverage, and negotiate improved terms. While underwriting skills are still evolving, the market is undoubtedly more sophisticated than it was even two or three years ago.

Looking ahead - The current soft market is creating opportunities for clients across the region to improve coverage while reducing cost. At the same time, new risk financing strategies and evolving coverages like cyber demand careful navigation and expertise.

As long as capacity remains abundant and competition robust, we expect favourable market conditions to continue. However, vigilance is key, shocks such as large-scale catastrophe losses could alter the trajectory quickly.

For now, though, clients should seize the chance to strengthen their programmes, explore innovative solutions, and position themselves strongly for the future.

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SSP

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