State of the Global Insurance Market: Q3 2025

Welcome to Costero Brokers’ quarterly report on the State of the Global Insurance Market for Q3 2025.

As the year continues, economic shifts, geopolitical dynamics, natural catastrophes and technological developments are influencing risks and opportunities for insurers and brokers worldwide. As we navigate an ever-evolving insurance landscape, this report provides a concise overview of key trends and developments shaping the global insurance market today,

The UK and Global Economy

• UK economy: Inflation is easing only slowly; with most rates on hold. UK consumer price inflation (CPI) was 3.8% year-on-year in August, unchanged from July. Services inflation remains sticky. The Bank of England (BoE) held the Bank Rate at 4.0% on 17 September and scaled back the pace of quantitative tightening (gilt sales) for the coming year. For insurance balance sheets, that means “higher-for-longer” discount and reinvestment yields, but no rapid fall in claims inflation. (Sources: UK Office for National Statistics, Bank of England)

• US economy: Disinflation continues, while the Fed trims rates. US CPI rose 2.9% in August (core CPI 3.1%). The Federal Open Market Committee (FOMC) cut the policy rate by 0.25% on 17 September, setting the federal funds target range at 4.00%–4.25%. Policymakers described the move as a risk-management step amid softer labour data. For insurers, the combination of decent carry and slightly easier policy has kept bond market volatility contained. (Sources: US Bureau of Labor Statistics, Federal Reserve)

• Global economy: Growth is steady but risks are two-sided. A recent update from the International Monetary Fund (IMF) put 2025 global GDP growth at ~3.0%, noting tariff uncertainty and geopolitics as the main downside risks. The Organization for Economic Co-operation and Development (OECD) points to resilience for 2025 but warns that the full tariff impact has not yet shown up in data. (Sources: IMF, Reuters)

Insurance Industry Developments

• UK insurance market: S&P Global Ratings says UK carriers are navigating a tougher backdrop shaped by economic uncertainty, regulatory change and ongoing consolidation. In life insurance, demand is stable to rising, supported by a buoyant pension risk transfer pipeline as strong defined-benefit funding and higher gilt yields make deals attractive. Increasing numbers of mergers and acquisitions (M&A) are unlikely to change industry structure in the near term. By contrast, property & casualty (P&C) faces greater pressure: while recent rate rises improved results in some retail lines, abundant capacity and robust competition are pushing commercial pricing down. S&P judges any profitability boost in P&C as temporary with margins likely to come under strain over time. (Source: Reinsurance News)

• Global commercial pricing: Markets are softer overall, with casualty still firmer. Marsh’s Global Insurance Market Index shows global commercial insurance rates fell 4% in Q2 2025, the fourth consecutive quarterly decline. That tone carried into many Q3 placements, particularly for property and financial lines. Large and loss-exposed casualty accounts remained firmer. (Source: Marsh)

• UK regulation: Climate risk supervision is tightening. The Bank of England’s Prudential Regulation Authority (PRA) is consulting on CP10/25, its paper updating expectations on climate-related governance, scenario analysis and management information for banks and insurers. This signals deeper, evidence-based supervision through 2026. (Source: Bank of England/PRA)

Underwriting Performance

• Lloyd’s H1 2025 results: Profit and robust solvency despite higher major losses. Lloyd’s of London reported £32.5bn gross written premium, £4.2bn profit before tax, and a 92.5% combined ratio (CR) for H1, with the underlying CR at 82.1% once major losses are excluded. The market-wide solvency ratio stood at 206%. California wildfire losses in Q1 were the main difference to last year’s unusually low major-loss period. (Source: Lloyd’s)

• US P&C: Combined ratio improved in Q2 after a tough Q1. A report from the American Property Casualty Insurance Association (APCIA) and market analyst Verisk notes that industry results stabilised in Q2 after severe Q1 losses, with secondary perils and private passenger auto severity still key watch-points. (Source: Verisk/APCIA)

Tech, Cyber and AI Developments

• Ransomware remains highly disruptive: A ransomware attack at aviation software supplier Collins Aerospace disrupted airport operations across parts of Europe in late September, highlighting dependent-business-interruption risk for airlines, airports and their partners. The cyber incident resulted in days of check-in system disruption and manual workarounds, although the level of insured loss is still unclear. (Source: Reuters)

• Cyber claims mix: New portfolio data shared by market participants shows that ransomware now accounts for the majority of incurred cyber losses in many books; where losses occur, severities are trending higher even as overall claim counts fluctuate. (Source: Insurance Journal)

• Emerging cyber risks: Supply-chain and vendor attacks are rising fast. Third-party compromises have doubled year-on-year, according to recent reporting, shifting security focus to software bills of materials (SBOMs), multi-factor authentication across vendors, and tighter contract clauses. (Source: Financial Times)

• AI regulation: EU obligations for general-purpose AI are now live. Under the EU AI Act, the first obligations for providers of general-purpose AI (GPAI) models took effect on 2 August 2025 (transparency and copyright-related duties). Models already on the market before that date must comply by August 2027. The UK’s National Cyber Security Centre (NCSC) also published guidance on adapting vulnerability disclosure for AI safeguards. (Sources: Digital Strategy, NCSC)

Reinsurance Market

• Mid-year renewals: Reinsurers see a tilt towards buyers in property-catastrophe. At 1 June and 1 July, multiple brokers reported flat-to-down risk-adjusted rates on property-catastrophe reinsurance, with ample capacity and a measured return of appetite in upper layers. (Sources: Howden Re, Gallagher Re)

• Insurance-linked securities (ILS) and cat bonds: Catastrophe bond issuance set fresh records this year. Artemis now tracks 95 new cat bond/ILS deals so far in 2025, already matching last year’s full-year count – while AM Best sees ILS capacity potentially reaching USD $114bn in 2025. (Sources: Artemis on cat bonds / AM Best)

• Signals from leading reinsurers: Public updates from major reinsurers during Q3 pointed to competitive dynamics at July renewals and selective growth. For example, Munich Re noted price and volume slippage versus 2024 at mid-year but kept its full-year profit target. (Source: Reuters)

Natural Catastrophes

• Global catastrophe losses: In the first half of 2025, natural catastrophe global insured losses reached about USD $80bn, the second-costliest H1 on record, driven largely by US tornados and wildfires. (Source: Reuters)

• US tornados: A mid-September outbreak of severe convective storms (SCS) set new annual tornado records in North Dakota, adding to a year of damaging wind and hail across the US Plains and Midwest. (Source: The Guardian)

• Atlantic hurricanes: As of late September, the North Atlantic season has produced 7 named storms, 2 hurricanes, and 2 major hurricanes, with Accumulated Cyclone Energy (ACE) about 36% below the long-term norm. The recent system of note is Hurricane Gabrielle, intensifying in the open Atlantic and heading toward the Azores. (Source: NOAA)

• Canada wildfires: The Canadian regions of Manitoba and Saskatchewan have been ravaged by a series of over 700 wildfires since May, causing insured losses of around CAD $300 million. (Source: Insurance Bureau of Canada)

Geopolitical Risks

• Shipping war-risk: After deadly attacks in July, war-risk premiums for Red Sea transits more than doubled, with some quotes around 0.7%–1.0% of hull value. In the Persian Gulf, Strait of Hormuz pricing moved to around 0.5% for some voyages during June’s flare-up. These costs have filtered through marine hull, cargo and logistics covers via altered routing, delays and surcharges.(Sources: Reuters on Red Sea / Hormuz)

• Ukraine conflict: Refinery strikes have tightened fuel markets. Ukraine stepped up long-range drone strikes on Russian refineries in September, disrupting around 1 million barrels per day of refining capacity at points and lifting diesel margins. Knock-on effects include higher bunker and diesel cracks and shifting cargo routes. (Sources: Financial Times, Reuters)

• Tariffs and trade: The International Monetary Fund ( IMF flagged tariff risks in July, and recent monitoring shows US effective tariff rates are elevated versus prior years. For trade credit, cargo and political risk underwriters, that means continued scrutiny of counterparties and routes. (Source: IMF)

Looking ahead..

As we enter the final months of 2025, Costero Brokers remains committed to supporting our clients and partners in navigating their challenges. Our expertise and insights are here to help you make informed decisions and seize opportunities in a rapidly changing market.

For more detailed analysis and resources, visit our website or contact us.

Disclaimer:

This market report was developed for reference only, and any prospective statements about possible future events or performance are based on developing factors regarding economic and business activity relevant to financial and insurance markets. Such prospective statements involve risk as actual results may differ materially from those expressed or implied due to future changes in relevant factors. We are not responsible for the accuracy of the third-party information cited herein and undertake no obligation to update any such data or prospective statements, nor do we in any way intend to provide legal, financial, or insurance advice regarding any existing or future litigation or other matter discussed or projected herein. Please seek the advice of your own professional advisors or counsel regarding your specific circumstances.