Global property premiums continue to soften, with the latest Marsh Global Insurance Market Index (GIMI) reporting their steepest drop in recent years. The primary driver behind this decline is a relatively quiet year for natural catastrophes. Even after Hurricane Melissa’s headline grabbing destruction in Jamaica, 2025 could still close following one of the insurance industry’s most benign six-month periods for nat cat losses in recent memory.
According to Marsh, global average property rates fell 8% in Q3, fuelled by heightened competition among insurers. The Pacific region saw the sharpest decline, with rates plunging 14%.
“It’s been a really interesting year,” said Scott Eccleston (pictured above), Marsh’s head of risk management in the Pacific.
2025 follows five consecutive years of natural catastrophe losses exceeding US$100 billion. Early in the year, it appeared this trend would continue – perhaps even worsen. January’s devastating Palisades Fire in Los Angeles destroyed nearly 7,000 homes and businesses. By June, claims from that event had already pushed the market past US$80 billion in nat cat losses, according to Swiss Re and Munich Re.
“That is double the 10-year average of nat cat losses in the first half of the year,” said Eccleston. “So we were heading for a horrendous year which was going to be about US$145 billion in annualised nat cat losses.” A subdued North American hurricane season, however, changed the outlook.
“We’re still probably going to exceed US$100 billion in nat cat losses but it looks like we’re not going to be anywhere near that US$145 or US$150 billion that was being forecast in August this year,” he said.
Despite the destruction in Jamaica, Eccleston and other industry leaders believe it will not alter the downward trajectory of insurance rates.
“Jamaica is not going to have any impact on the trajectory of insurance rates,” he said.
A key factor is the current oversupply of capital entering insurance markets.
Even some properties in high-risk areas exposed to floods, fires and cyclones are experiencing rate reductions. Years of a hard market have pushed these insureds to better manage their risks.
“The hard market was so sustained that it was year in, year out, of premiums going up, deductibles being forced up, limits coming down and coverage restricted,” said Eccleston. “So insureds were incentivised or motivated to address the risk to improve this situation.”
For instance, commercial and high-hazard properties are increasingly installing sprinkler systems to mitigate fire risk. There’s also a notable decline in the use of expandable polystyrene (EPS) for insulation and cladding, following regulatory restrictions across the EU, US, Japan, and Australia.
These improvements, brokers say, are helping drive property rates downward after years of relentless increases.
“So now that those rates have reached a peak and they’re coming off, insurers are actually feeling more confident about the risk because the risk has improved,” he said.
“There is an abundance of capital and new capital coming into the insurance market,” said Eccleston. “Insurers’ profitability is up and I don’t see any change in the immediate future.”
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