Insurance Focus: Q1 Market Update

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Competition drives growth in a dynamic market

As the insurance industry navigates the evolving market landscape, understanding key developments is critical for making informed decisions. The market has remained relatively unchanged quarter on quarter, reflecting a disciplined and measured approach to growth. The focus has been on strategic expansion, supported by new capacity deployment and targeted moves into selected sectors.

Although reinsurance pricing remained historically high, risk-adjusted rate reductions of around 15% to 25% were widely achieved for the majority of placements at the 1 January 2026 renewal.This was supported by a calmer year for natural catastrophes, as noted in the Gallagher Re First View: Options and Opportunities report.

Of note, the market has experienced renewed M&A activity, an indication that growth is being fuelled by acquisitions. New entrants have also increased supply in several lines, which has added to competitive pressure.

Here are the latest Q1 2026 insights to help inform your decision-making and stay ahead of the market:

Property: An opportunity to reassess

Meaningful opportunities exist for buyers in the property market. Significant capacity remains available, and for well-performing risks, year-on-year rate reductions can be achieved.

Now is an opportune moment for businesses to review their existing structures. Complex or layered programmes, for example, can, in some cases, be simplified without compromising protection. In such an environment, insurers are open to alternative structures, revised deductibles and changes to coverage limits, where the underlying organisational risk profile supports this.

Financial savings achieved at renewal can be viewed as an opportunity for reinvestment. Underinsurance, for example, remains an important consideration, with the need to reassess property valuations and rebuilding costs, which continue to be impacted by inflation.

Casualty: Understanding underlying risks

Despite claims inflation, there has not been the volume or severity of losses to shift the direction of the casualty market drastically. Insurers are therefore actively seeking growth across mid-market and corporate portfolios. Well-managed programmes with clear claims histories and performances are attracting significant interest from carriers, which may support favourable renewal outcomes.

Social inflation, driven by increased litigation and higher settlement values, continues to raise costs and influence long-term pricing considerations. Underwriters are paying close attention to exposure data, contractual risk transfer and risk management practices.

Motor: Lower premiums despite claims inflation

Claims inflation remains elevated fuelled by repair costs, parts pricing and complex new vehicle technology. Risk appetite has increased across much of the market, with carriers prepared to compete strongly for well-performing fleets to retain and grow portfolios. Flat or reduced renewals can be secured if backed up by a strong claims record.

There are some exceptions. Heavier haulage remains a smaller, more capacity-constrained segment, which continues to attract a firmer rating. In this environment, differentiation matters more than ever. Strong risk management and credible fleet data are central to achieving positive results.

M&A activity and competitive pricing across excess layer (XL) reinsurance programmes are also contributing to competitive positioning at the primary level.

Risk assessments across fleet operations and driver exposure can drive better outcomes. Structured driver safety training is particularly relevant for heavy haulage operations. Telematics and performance data can also help demonstrate proactive management.

Cyber: Increased preparedness amidst rising threats

Despite several high-profile cyber incidents in 2025 that disrupted the market, conditions remain favourable, suggesting greater competition and market capacity. However, systemic losses can lead to less profitable loss ratios, which could turn the tide.

Cyber risks continue to grow in complexity. Ransomware remains a key driver of claims. Businesses are paying closer attention to third-party and supply chain vulnerabilities, with insurers placing greater emphasis on supplier oversight and cybersecurity controls.

Artificial Intelligence is also shaping the landscape, helping organisations strengthen phishing detection and respond to incidents appropriately. It also raises new questions on how policies should respond to AI-related incidents.

Market conditions and evolving threats are enabling organisations to secure more favourable cyber insurance coverage. While several businesses continue to explore cyber insurance to avoid regulatory fines, few are adopting it solely for compliance. Insurers continue to encourage stronger cyber hygiene through measures such as multi-factor authentication, robust network security and staff training.

Professional indemnity: Competitive pricing supported by strong capacity

The PI market continues to offer competitive pricing, driven by strong capacity and broad insurer appetite across most sectors. Well-managed firms with robust governance and solid claims histories are achieving favourable outcomes. MGAs remain a major driver of capacity growth, focusing on SME risks. Increased MGA participation continues to ripple through the wider market, keeping pressure on premiums and encouraging broader coverage offerings.

AI-driven exposures are receiving increased scrutiny, with insurers focusing on how firms oversee and validate AI-assisted work. As AI adoption grows, claims severity is expected to increase in sectors where AI outputs influence professional advice, prompting more detailed discussions around governance and controls.

To achieve favourable outcomes, businesses should document governance frameworks, demonstrate oversight of technology-enabled processes, and engage early with comprehensive underwriting information to differentiate their risk profiles and secure better renewal outcomes.

Looking for guidance?

Our specialist brokers can help you better prepare, identify and mitigate complex risks. If you would like to learn more about the latest insurance market intelligence, speak to our specialists today.

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Disclaimer

The sole purpose of this report is to provide guidance on the issues covered. This report is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.