The commercial insurance market is seeing falling rates driven by competitive pressures. This is accelerating softening conditions, providing risk managers with opportunities to optimize risk management and insurance procurement strategies.
As highlighted in our Global Marketplace Insights Q1 2025, this market shift reflects insurers’ growing appetite for business, driven by increased capacity and favourable underwriting results.
But while conditions are softening, this isn’t yet a fully soft market. You may need to use data and analytics to maximize cost savings in the short term and build resilience for longer-term market shifts. Analytics can play a critical role in optimizing the current environment, enabling you to secure beneficial terms while preparing for future changes.
We explore five ways you can optimize your risk and insurance strategy:
01
A softening of the market is unlikely to be uniform across all lines of insurance. Some will soften faster than others. For example, while property insurance premiums may drop, cyber premiums could remain high due to ongoing claims or regulatory pressures.
By quantifying risks across your entire portfolio using analytics, you can take advantage of these misalignments, buying more coverage where insurance is cheap and retain more risk in higher-cost lines, effectively optimizing your overall risk financing strategy.
02
The focus on growth has made insurers more flexible on pricing for high-quality accounts, creating opportunities for data-driven negotiations. Analytics empowers you to enter discussions armed with insights on claims trends, loss ratios and how you compare against industry benchmarks to enable tailored agreements that better reflect your organization’s risk profile. You could, for example, negotiate customized terms, lower deductibles or increased limits after understanding how different options stack up against each other.
03
While insurers’ appetite for growth suggests continued softening, significant catastrophic losses or global political uncertainty could disrupt this trend. According to WTW's Natural Catastrophe Review, natural catastrophes continue to put strain on global insurance markets. Losses surpassed $140 billion in 2024, marking the fifth consecutive year insured damages exceeded $100 billion, with total economic damages surpassing $350 billion.
Large natural catastrophe events could lead to a reversal of the softening market, so your organization needs to be prepared. Scenario modeling can be a useful tool here, allowing you to overlay projected increases onto analysis to see the total impact on the overall risk budget. This perspective could inform either recalibrating how you allocate a higher risk budget or determining how much insurance you should buy.
04
Data analytics supports proactive risk management by identifying high-frequency claim areas and enabling targeted interventions. We’ve seen how insurers are increasingly rewarding organizations with strong risk mitigation measures and ESG credentials, offering differentiated pricing and additional capacity for accounts aligned with sustainable practices.
Systematically gathering and scrutinizing data from near-misses, accidents and unsafe behaviors can help uncover hidden patterns and emerging trends. Analytics can then diagnose your strengths, weaknesses and process gaps to point out areas where additional attention and resources can have the most impact. This data-driven approach empowers you to not only achieve immediate savings but also build resilience for future market cycles.
05
Insurers are increasingly placing greater focus on systemic risk management, particularly in lines like cyber, where advances in risk modeling are driving more innovative solutions. By using analytics to assess these options, you can develop a diversified risk financing strategy that’s less reliant on traditional insurance. This can help your organization to better control long-term insurance expenses, which is crucial when soft markets inevitably turn hard.
While organizations might typically consider alternative risk transfer solutions in hard markets or adverse circumstances, the planning and due diligence required means it’s better to explore your options when you’re not under pressure. By evaluating alternative risk financing in gentler conditions, you can add to your arsenal of options and deploy as required.
Discover a better way to achieve risk resilience and unlock more value from your insurance spend during softening commercial markets. Get in touch with your insurance broker and ask to see our Risk & Analytics capabilities to find out more.
WTW hopes you found the general information provided here informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
