Optimizing Your Property Program: How to Use a Soft Market to Build Resilience

Optimizing Your Property Program: How to Use a Soft Market to Build Resilience
July 4, 2025 6 mins

Optimizing Your Property Program: How to Use a Soft Market to Build Resilience

Building long-term commercial property resilience

While the global property insurance market currently favors buyers, it is uncertain how long this will last. Businesses should act now by adopting a proactive, data-driven property risk strategy that aligns financial stability and risk appetite with market dynamics.

Key Takeaways
  1. Property rates continue to decline, insurance capacity is ample and insurer appetite remains strong. However, one major natural catastrophe loss event could turn the market.
  2. Take advantage of market conditions now by creating a long-term property risk strategy.
  3. Use pre-renewal strategies to negotiate better property renewals with risk analytics tools and modeling.

This article is the first in a three-part series exploring property risk mitigation strategies in the current market.

Despite steady growth in both the frequency and severity of global insured losses from natural catastrophes (nat cat), there is a trading window in the global property sector that has remained favorable for buyers.

  • U.S. property rates declined by an average of 8.52 percent in Q1 2025 and accelerated to 12.2 percent in April 2025, according to the Aon Q2 2025 Property Market Dynamics Report. In Europe, the Middle East and Africa (EMEA), the market is softening at different levels by country.
  • Ample capacity continues for quality risks and less-challenging occupancies. In certain countries in EMEA where capacity may not be as prevalent, different avenues can be accessed, including the London market and reinsurance market.
  • Globally, reinsurer appetite continues to grow, with reported industry equity at $600 billion by year-end 2024, according to Aon data.
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Despite recent favorable years, average property losses have almost doubled over the past 20 years. While insurers remain profitable, the market is fragile, and the long-term trend continues to be challenging.

Ryan Barber
Global Head of Property

Over time, many variables could put pressure on rates, including an increase in nat cat losses, population growth in nat cat-prone areas, inflation and tariffs potentially increasing replacement cost and driving up losses.

Building long-term commercial property resilience Diagram 1

“Buyers are benefiting from the softening market as insurers allocate additional capital to write more property insurance, given both the current rate environment and unprofitability of some other lines,” says Vincent Flood, head of property in North America.

However, as rates continue to decline in 2025, he warns that the market could be just one significant cat event away from a turn.

“Accounts renewing in Q3 or Q4 need to hope for a benign wind season,” adds Flood. “Absent an event, the soft market will continue to accelerate, with renewals reaping the benefit of a year-end push by insurers to hit growth targets.”

Use Pre-Renewal Strategies to Optimize the Current Soft Market

Pre-renewal strategies to negotiate better property renewals using risk analytics and modeling are essential to boost resilience. “Strengthen programs now to future-proof against market changes,” says Sean Rider, head of Risk Analytics in North America. “Focus on modern quantitative analytics to maximize resilience.”

  • Highlight your unique risk approach and internal strengths. Aon clients use the Property Risk Analyzer to capture exposure and loss data, sharing it with underwriters. This tool helps risk leaders apply past loss knowledge to future decisions. Collaborate with a broker who can match or exceed insurance market analytics to effectively communicate your property risk story.
  • Involve claims experts early. This will help expose coverage gaps and align policy coverage with your risk profile and operational needs. "A good claims expert identifies key risks," says Michael Sgarlata, practice leader for Claim Preparation, Advocacy and Valuation in Europe, the Middle East and Africa.
  • Review limit adequacy. This is important, especially if limits were cut during the hard market cycle due to availability and/or pricing constraints. Nearly 11 percent of Aon’s property clients increased limits in Q1 2025. Aon expects capacity to remain readily available with an orderly rate decrease-dominated treaty reinsurance cycle for January 1, 2025.
  • Eliminate non-concurrencies and restrictions. Prioritize concurrency in program signings and work with brokers to improve terms and conditions. “If savings are made, reinvest in projects that show insurers your commitment to improving and managing risk,” says Jennifer Walker, strategic broking director in Europe, the Middle East and Africa.
  • Review asset valuations. Accurate asset valuations prevent underinsurance and significant financial losses. Provide up-to-date valuations, risk mitigation strategies and historical data to differentiate your risk. Maintain due diligence on your reported values to not only manage your firm’s exposure but also make sure you’re not over-reporting values.
  • Use alternative risk transfer (ART) structures to match capital to risk and complement the property portfolio. ART structures like parametric, structured solutions, captives and facultative reinsurance, fuel competition and fill protection gaps. Further, tap into new pools of capital to push out predatory and opportunistic capacity.
  • Reinvest savings to improve your program. The soft market has been a boost to many risk management budgets. Invest those savings in risk improvement, loss control and valuation projects to differentiate your risk in the market.

Adopt a Long-Term Property Risk Management Strategy for Future Resilience

While the current buyer-friendly property market provides some respite for risk managers, it can also obscure emerging risks and concerns that could confront risk managers in the long term.

8.52%

Average decline of U.S. property rates in Q1 2025.

Source: Aon’s Q2 2025 Property Market Dynamics Report

Download Report

What’s Contributing to Growing Property Risk?

  • 01
    Costly Perils

    The costliest peril is tropical cyclones. Secondary perils are also growing: There have been $1 trillion in losses since 2000 for earthquakes, severe convective storms and droughts.

    Source: Aon's 2025 Climate and Catastrophe Insight

  • 02
    Increasing Insured Losses

    2024 insured losses reached $145 billion (slightly above the five-year average). Losses in 2000 were at $27 billion.

    Source: Aon's 2025 Climate and Catastrophe Insight

  • 03
    Growth in Cat-Prone Regions

    Of the top 15 growing U.S. cities, nine are in Texas and Florida, putting more people and insured values at risk.

    Source: U.S. Census Bureau

  • 04
    Tariffs and Supply Chain Risks

    Global geopolitical trade pressures and tariffs have caused tensions and pressures for businesses and their supply chains. Risk managers must consider the potential effects on risk exposure.

Building long-term commercial property resilience Diagram 2

“Now is not the time to introduce more volatility by reducing limits or think of risk in a more aggressive way,” adds Rider. “This is an opportunity to take advantage of the market by introducing more resilience.”

Talk to our experts about how to best navigate a soft property market while protecting your business and building resilience.

Aon’s Thought Leaders
  • Ryan Barber
    Global Head of Property
  • Vincent Flood
    Head of Property, North America
  • Sean Rider
    Sean Rider
    Head of Risk Analytics, North America
  • Michael Sgarlata
    Practice Leader, Claims Preparation, Advocacy and Valuation, Europe, the Middle East and Africa
  • Jennifer Walker
    Strategic Broking Director, Europe, the Middle East and Africa

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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