Artex Risk Solutions has outlined a more stable outlook for the North American insurance and global reinsurance sectors, while pointing to continued activity in alternative risk structures and insurance-linked securities (ILS).
According to the report, entitled Alternative View – Spring 2025 report, the US commercial insurance market has shown indications of stabilization following a period of volatility. The company said treaty reinsurance renewals in 2024 were more consistent compared to disruptions experienced in the previous year. Improved underwriting performance also contributed to a decline in average combined ratios, which fell to 96.6% in 2024 from 101.8% in 2023.
Investment returns have also reflected this shift. The S&P Composite 1500 Property & Casualty Index rose by 10% year-to-date through May 30, 2025, compared to a 0.5% increase in the broader S&P 500 over the same period.
Property insurers are expanding coverage in 2025, supported by underwriting results and premium growth. However, exposure to natural catastrophes, including hurricanes, wildfires, and severe storms, remains a focus area.
Casualty lines continue to face pressure from rising legal costs, higher claim severity, and developments in commercial auto, such as distracted driving and labor market constraints.
The cyber insurance sector remains active, with policyholders adopting broader use of controls like multi-factor authentication. While claim frequency has increased, particularly around social engineering, pricing levels have generally held steady.
The directors and officers (D&O) liability market remains competitive, with insurers offering lower premiums and broader terms. Artex notes that developments in regulatory oversight and exposures related to artificial intelligence may influence conditions going forward.
Global reinsurance capital reached a record high of $655 billion as of April 1, 2025. Artex said that reinsurers anticipate continued underwriting profitability and return expectations in the double digits, assuming catastrophe losses stay within projections.
Despite the influx of capital, reinsurers remain selective. Pricing discipline and risk management practices are expected to continue.
Meanwhile, cell captives continue to gain momentum in North America and Europe. Their relative efficiency and ability to provide tailored coverage have contributed to broader use in sectors such as healthcare, energy and affordable housing. Captives are also being used in areas experiencing capacity constraints, including auto liability, environmental risk and cyber exposure.
Regulatory changes in jurisdictions including France, Italy, and the UK, along with adjustments to Solvency II rules, have created additional momentum for captive formation and growth.
The ILS market saw record issuance in 2024, particularly in catastrophe bonds and collateralized reinsurance. As of mid-May 2025, indexed ILS issuance had reached $12.64 billion, the highest on record for the first half of a year.
Alternative capital is also being deployed into non-catastrophe risks, such as cyber, terrorism and casualty. New structural features, including forward-exit options, are being adopted to improve liquidity for investors.
Lloyd’s Bridge 2 special purpose vehicle launched with $1.92 billion in 2024, attracting institutional support and further diversifying ILS market activity.
According to Artex, market conditions across insurance, reinsurance and alternative capital continue to evolve.
The report pointed to steady underwriting performance, growing investor interest and increased use of alternative structures as key themes shaping the current risk landscape. Continued focus on risk selection, operational efficiency and capital deployment is expected amid ongoing changes in litigation trends, regulatory developments and exposure to emerging risks.
