Declining P/C Rates and Rising Cost of Risk
The declining P/C rates and rising cost of risk have created an imbalance that Marsh McLennan CEO John Doyle calls “unsustainable.” According to Doyle, current insurance and reinsurance conditions are likely to continue through 2026 – unless there are major shifts in loss activity or economic performance.
Market Overview: Declining P/C Rates and Rising Cost of Risk
What was described by Doyle was rather a competitive but uneven market. Slower global growth, stronger carrier returns, and weaker pricing are defining this phase. Property and catastrophe reinsurance remain the hardest hit. According to Marsh’s Global Insurance Market Index, global property rates dropped 8% in Q3 2025, following a 7% fall in Q2.
On a larger scale, global commercial insurance rates dropped by 4%, mostly due to property. U.S. saw a 1% decrease, Canada 3%, and regions like the UK, EMEA, Latin America, and Asia experienced mid-single-digit declines. The Pacific region dropped by double digits; this shows how widespread the pricing softening has become.
Casualty and Liability: Rising Costs Amid Falling Prices
While most rates are falling, casualty lines still tell a different story. Global casualty rose 3% and U.S. excess casualty increased 16%, reflecting ongoing stress in liability costs. Workers’ compensation declined 5%, while financial, professional, and cyber lines each fell between 5% and 6%.
The divergence between falling prices and rising cost of risk exposes a growing imbalance that challenges insurer profitability and market sustainability.
Why Declining P/C Rates and Rising Cost of Risk Are Unsustainable
According to Doyle, there are several “pressure points” behind the increasing gap between softening prices and higher risks. Such as:
- Slowing global economic growth
- Declining interest rates
- Increasing exposure to extreme weather
- Rising liability costs, especially in the U.S.
- Higher healthcare expenses
These forces drive up the cost of risk while pushing down the returns. Insurers are taking on greater exposure for less reward, an equation as described by Doyle,“cannot last forever.”
MMC’s Strategic Response: The Thrive Program
To address all these challenges, MMC launched “Thrive”, a program focusing on automation, workforce optimization, and reinvestment in technology. “Thrive” is a new initiative to improve efficiency and long-term resilience, and over the next three years, it is expected to generate $400 million in savings, offset by $500 million in upfront charges.
MMC also rebranded as “Marsh” and created a new unit, Business and Client Services (BCS), to align with the Thrive strategy. According to Doyle, these efforts will enhance client value, streamline operations, and expand AI usage.
“The efficiencies we gain will allow us to invest more in technology and people,” he explained. “As we integrate AI, we can deliver greater value while strengthening margins.”
Talent and Competition in a Changing Market
Another concern addressed by Doyle is the growing competition for industry talent. He criticized some competitors for “unlawful and unethical hiring practices,” citing lawsuits against Willis Towers Watson and Granite Insurance Agency for allegedly poaching employees and clients.
Still, Doyle emphasized that colleague mobility supports innovation. “We’re proud to be an employer of choice,” he said, noting Marsh’s 90,000-plus colleagues and strong value proposition.
The Bottom Line: Balancing the Market
The declining P/C rates and rising cost of risk reflect a major challenge for the insurance industry. Without market corrections or stronger economic growth, such an imbalance will persist and put pressure on insurer performance and long-term sustainability.
Doyle’s message is clear: the industry must adapt now to create a healthier balance between pricing, exposure, and profitability
