The insurance market exhibited signs of softening in the final quarter of 2024, with eased pricing pressures after years of consistent premium increases, a report from Gallagher Re noted. This change offers positive news for insurance buyers across various sectors.
The price hikes experienced in previous years were attributed to a combination of factors, including inflation driven by the aftermath of the COVID pandemic, supply chain disruptions caused by geopolitical instability, rising global catastrophic losses, and a significant reset in reinsurance pricing in early 2023. Notably, extreme weather events in New Zealand, including the Auckland Anniversary floods and Cyclone Gabrielle, also contributed to the strain on the market.
However, as inflation has started to ease, supply chains have normalised to a “new normal,” and reinsurance markets have adapted to the realities of increased natural disasters. Despite the ongoing challenges posed by climate change, insurance and reinsurance markets have found a new baseline to accommodate these risks. Gallagher Re’s latest data highlights that although 2024 saw a higher number of major catastrophic insured events than the 10-year rolling average, the global insurance market was able to absorb these losses, thanks to the reinsurance restructuring in 2023.
This adjustment has brought stability to both global and local insurance markets, offering further reassurance to buyers. Even the significant losses from the 2025 Los Angeles area firestorms, estimated at US$52 billion to US$57 billion, did not result in major shifts within the insurance market. Similarly, in New Zealand, the losses from 2023’s extreme weather events, which totalled approximately NZ$3.75 billion, were followed by a period of relatively low claims activity, helping insurers recover.
The increased premiums during 2023 and 2024 have allowed major insurers such as IAG and Suncorp to report substantial improvements in profitability. IAG’s profit after tax in Australia and New Zealand grew by 91.2% year-on-year, while Suncorp’s net profit after tax increased by 89%. These results reflect broader trends in the global insurance and reinsurance industries, with strong financial performances attracting more capital and fostering greater competition in the marketplace.
As insurers adapt to these new market dynamics, competition is rising, especially in the commercial insurance space. Many insurers are now more willing to negotiate on premiums, particularly for material damage and business interruption covers, which had previously seen little flexibility. The London insurance market, in particular, is proving highly competitive for high-value commercial risks, as insurers seek to diversify portfolios and reduce their reliance on the US market.
For insurance buyers, this means more favourable conditions. Policies for risks with a good claims history may no longer see premium increases at renewal in 2025, marking a shift in favour of the buyer. Nevertheless, it is advised that businesses engage early with their brokers to ensure the best outcomes and strategic engagement with the market.
How will these changes potentially impact consumers? Share your thoughts in the comments below.
