The insurance landscape in 2025 continues to be shaped by a convergence of global and domestic pressures. Geopolitical instability, regulatory reform, and economic uncertainty are influencing underwriting strategies, claims environments, and capital flows across all major lines of business.

This is an executive summary. A detailed report is also available.

Governments and regulators are playing an increasingly active role, particularly as sanctions regimes, energy disruptions, and climate-related risks intensify. These dynamics are having a pronounced impact on sectors with international exposure and complex supply chains, requiring insurers and insureds alike to adapt with agility and foresight.

Despite the ongoing challenges faced by the industry, improved loss ratios and stronger investment returns have bolstered the financial position of many insurers. This has triggered a shift in market dynamics, with heightened competition and renewed appetite across several general insurance classes. As a result, clients in select segments are beginning to benefit from stabilising or softening premium trends, particularly where risk quality and claims performance are strong.

Looking ahead, insurers are focused on five strategic imperatives:

1. Enhancing risk and reinsurance strategies;
2. Accelerating digital transformation;
3. Innovating for underserved markets;
4. Embedding climate adaptation into underwriting; and
5. Addressing affordability and access.

For clients, the path forward will require a proactive approach to risk management, data transparency, and strategic engagement with the market.

This executive summary explores the key developments across major insurance lines, providing insights to support informed decision-making in a complex and evolving environment.

Systemic challenges

Several systemic challenges continue to shape underwriting behaviour, product design, and risk management strategies across all major lines.

These issues are not confined to individual sectors—they are influencing the broader insurance ecosystem and require coordinated responses from insurers, brokers, and insureds alike.

Claims Inflation and Rising Loss Costs

Across property, casualty, professional indemnity, and management liability, insurers are contending with escalating claims costs.

Legal expenses, rebuilding inflation, and broader liability interpretations are driving up the severity of losses.

This trend is particularly pronounced in long-tail lines and sectors exposed to litigation, prompting insurers to reassess pricing models and coverage terms.

Climate Risk and Environmental Exposures

Climate-related losses remain a dominant concern. Australia’s exposure to floods, bushfires, and cyclones continues to impact property and construction portfolios, while environmental liability—especially PFAS contamination—is under close scrutiny in casualty and specialty lines.

Insurers are rewarding proactive mitigation but remain cautious in catastrophe-prone regions and industries with environmental sensitivities.

Cyber Threats and Technology-Driven Risk

Cybercrime is now a material exposure across multiple lines.

Ransomware, business email compromise, and supply chain breaches are driving claims in cyber, management liability, and professional indemnity. AI-assisted fraud is emerging as a new threat, prompting insurers to introduce specific exclusions and reassess investigative protocols.

Organisations must demonstrate robust cyber hygiene and governance to secure favourable terms.

Regulatory Oversight and Compliance Pressure

Regulatory scrutiny from APRA, ASIC, and other bodies is intensifying. The Cyber Security Bill 2024 is reshaping compliance expectations, while workers compensation schemes are evolving with new return-to-work obligations and psychological injury reforms.

Across all lines, insurers are responding with more disciplined underwriting and increased focus on governance, affordability, and consumer outcomes.

Underinsurance and Valuation Accuracy

Underinsurance remains a persistent issue, particularly in property, construction, and workers compensation. Rising rebuild costs and wage inflation are prompting insurers to demand updated valuations and accurate declarations.

Failure to maintain current data can lead to coverage disputes and reduced claims settlements, making valuation discipline a critical component of risk management.

Worker-to-Worker and Employment Practices Liability

Worker-to-worker claims continue to impact underwriting in casualty, construction, and labour-hire sectors.

Meanwhile, Employment Practices Liability (EPL) claims are rising in management liability, driven by cultural shifts, evolving workplace norms, and increased employee awareness.

These exposures are prompting insurers to tighten terms and apply more selective underwriting.

Market Segmentation and Selective Underwriting

Despite broader market softening, insurers are segmenting risks more aggressively. High-risk sectors—such as construction, labour-hire, and environmental—face tighter terms and elevated deductibles, while well-managed risks are rewarded with broader coverage and premium relief.

Specialty lines continue to face capacity constraints, reinforcing the need for strategic placement and early engagement.

Property

Market Overview

• Appetite expanding for commercial property with strong governance.
• Risk presentation and operational resilience key to securing terms.
• Segmenting risk profiles essential for diversified portfolios.

Capacity and Reinsurance

• 2025 renewals brought increased capacity and competitive pricing.
• Reinsurance programs influencing insurer appetite and pricing.
• Postcode-driven pricing models gaining traction.

Key Market Drivers

• Climate risk, rebuilding costs, regulatory oversight, and mitigation efforts shaping behaviour.
• Updated valuations and proactive risk management increasingly rewarded.

Broker and Insured Considerations

• Accurate valuations and strong risk presentation critical.
• Strategic marketing and timing can improve outcomes.
• Layered programs and parametric solutions may help manage affordability.

Outlook

• Competitive conditions expected to continue if catastrophe losses remain low.
• Data analytics and risk modelling to play greater role in underwriting.

Casualty

Market Overview

• Stabilised and competitive market, especially for general liability.
• Portfolio diversification and strong capitalisation supporting growth.

Insurer Appetite

• Expanded appetite for standard risks with strong safety records.
• Caution persists in construction, labour-hire, and environmental sectors.

Capacity and Reinsurance

• Stable reinsurance and adequate capital supporting broader appetite.
• Specialty lines face capacity constraints and tighter controls.

Premium Trends

• General liability premiums down 5–10% for favourable risks.
• High-hazard sectors still face elevated deductibles and restrictive terms.

Market Trends

• LTAs returning; underwriting restrictions easing.
• Appetite increasing for high-frequency, low-severity claims.

Challenges and Emerging Risks

• PFAS, ESG, social inflation, and worker-to-worker claims under scrutiny.
• Cross-sector exposures and litigation funding increasing complexity.

Regulatory Oversight

• APRA and ASIC driving focus on governance and affordability.
• Product design and claims handling shaped by regulatory expectations.

Strategic Considerations

• Maintain detailed claims data and safety protocols.
• Explore opportunities in standard liability lines.
• Manage expectations in high-risk sectors.

Outlook

• Continued softening expected for general liability.
• Segmentation and selective underwriting to persist.

Construction

Market Overview

• Softening continues into 2025, especially in contract works and liability.
• Increased competition and insurer appetite benefiting well-performing clients.

Insurer Appetite

• Broadened appetite for CAR and liability risks.
• Deductibles for water damage remain elevated.

Capacity and Reinsurance

• Reinsurance renewals boosting capacity and underwriting flexibility.
• Stable environment supporting broader project types and values.

Premium Trends

• CAR renewals: -5% to +5%.
• Liability: -15% to +5% for claims-free programs.
• Jurisdictional factors influence pricing and deductibles.

Key Market Drivers

• Climate risk, rising rebuild costs, regulatory oversight, and risk mitigation.
• Strong risk presentation differentiates outcomes.

Broker and Insured Considerations

• Accurate valuations and detailed submissions essential.
• Strategic marketing and early engagement improve results.
• High-risk jurisdictions require tailored strategies.

Outlook

• Competitive conditions expected to continue.
• Risk segmentation and early engagement remain key.

Professional Indemnity

Market Overview

• Increased competition from Lloyd’s and local insurers.
• Selective underwriting based on industry and operational maturity.
• Strong governance and compliance rewarded with broader coverage.

Premium Trends and Insurer Appetite

• Market softening with 0–10% premium reductions.
• Financial services, consulting, and tech firms seeing best terms.
• Construction and engineering under scrutiny but improving.

Claims Trends

• Legal cost inflation and broader liability interpretations.
• Class actions and cyber-related PI claims increasing.
• Policy language tightening; exclusions introduced.

Outlook

• Buyer-friendly conditions expected to continue.
• Governance and early engagement critical to securing terms.

Management Liability

Market Overview

• Stable market with strong competition and capacity.
• EPL and Crime claims prompting underwriting reassessment.

Premium Trends and Insurer Appetite

• Rate reductions slowing; selective underwriting increasing.
• Governance and financial resilience now key considerations.

Claims Trends

• EPL claims rising due to workplace changes and employee awareness.
• Insolvency and fraud (including AI-assisted) driving Crime claims.
• Cyber losses increasingly addressed under Crime sections.

Broker and Insured Considerations

• AI governance and transparency essential.
• Review policy wording and exclusions carefully.
• Board oversight and employee training critical.

Outlook

• Competitive market to continue, but softening pace may slow.
• Selective underwriting and early engagement essential.

Cyber Liability

Market Overview

• Softening market with competitive pricing and expanded capacity.
• Ransomware, AI-enabled attacks, and supply chain risks dominate.

Premium Trends and Insurer Appetite

• 5–15% reductions for strong cyber hygiene.
• Capacity strong; underwriting cautious for high-risk sectors.

Claims Trends

• Ransomware accounts for 60%+ of large claims.
• BEC and supply chain breaches rising.
• Third-party risk management under scrutiny.

Broker and Insured Considerations

• MFA, endpoint protection, and incident response plans essential.
• AI-related risks prompting policy changes.
• Contractual risk transfer and employee training critical.

Outlook

• Buyer-friendly conditions expected to persist.
• AI, supply chain, and compliance to shape underwriting.

Workers Compensation

Market Overview

• Jurisdiction-specific reforms increasing complexity.
• Focus on psychological injury, RTW obligations, and injury management.

Legislative and Scheme Changes

• RTW requirements reinforced across states.
• NSW, VIC, QLD, SA, WA, ACT introducing new thresholds and documentation.

Premium Trends

• NSW: 8% increase; WA: 5.3%; TAS: 8.99%; ACT: 1.8%.
• VIC and QLD holding rates; SA and NT pending.

Strategic Considerations

• Accurate wage declarations and injury management frameworks essential.
• Early engagement with brokers supports better outcomes.

Outlook

• Emphasis on compliance and early intervention to continue.
• Robust systems and proactive planning key to navigating reforms.

The information on this page is intended for general educational purposes and necessarily simplifies some concepts for clarity. Insurance policies can differ widely between insurers, policy types, and jurisdictions. For guidance on your specific circumstances, you should review your policy documents carefully and consult a qualified insurance adviser, broker, or legal professional.