In our last report, we observed a reluctance among insurers to provide LEG3 coverage. While this reluctance still exists in some cases, discussions around LEG3 have resumed in others. However, LEG2 continues to be the preferred option for complex projects. Overall, we are witnessing stable and consistent coverage, which aligns with our expectations. This trend is encouraging and demonstrates insurers' willingness to compromise to secure business.

Sub-limits are still being closely examined, with markets maintaining vigilance to avoid pitfalls associated with higher exposure due to increased sub-limits. Additionally, there remains ongoing caution regarding natural catastrophe limits, a trend we do not anticipate changing, even with softening market conditions.

To encourage participation in risks, markets are lowering their minimum premium thresholds for new business. This shift is a response to softening conditions in domestic markets worldwide. Whether in the US, Canada, or Australia, we have observed that the London market is adjusting to lower rates to provide the capacity necessary to secure international business.

It's important to note that this primarily applies to more transactional wholesale international business, as well as UK domestic CAR coverage. For more complex risks, such as heavy civil projects and large EAR projects, there is still a demand for tailored solutions.

In terms of annual business, solutions are available at rates like those seen previously, with a general preference still leaning towards single projects where all aspects of risk can be effectively measured.

Recent months have seen notable events, such as wildfires in Los Angeles, with loss estimates around USD75bn, and Australia facing devastating impacts from Cyclone Alfred, along with widespread flooding in Queensland and New South Wales. Fortunately, markets are equipped with modelling tools to assess risks in areas exposed to NATCAT, enabling them to underwrite risks appropriately. The term ‘single cat peril’ is often used when offering terms.

While timber frame risks continue to dominate the market—particularly in North America—line capacity and sizes generally remain at the lower end, typically no more than USD7m. One might expect that the influx of new carriers entering the market would lead to a greater appetite for timber frame risks, but this change is likely to be a gradual process. Larger projects are often led by local insurers, with London being called upon to cover any remaining capacity.

In the next six months, well-known insurers, including Arch Insurance and Markel, will begin to open construction books, aiming to take the lead on certain risks. Consequently, 2025 has been a very dynamic period, marked by significant movement among underwriters between insurance companies. Attracting top talent is essential to meet the ambitious growth targets previously outlined.

With minimum premiums starting to decrease, we anticipate a reduction in the ‘differential terms’ often imposed by subscription markets. This should lead to a resurgence of ‘true’ following markets, where all carriers involved in a risk are generally aligned.