Commercial cover prices in Australia dropped by up to 20% in the fourth quarter as conditions remained in buyers’ favour, Aon says in a global market update.

The market overall was soft and key trends included flexible underwriting and the availability of increased limits for most lines, according to the broker’s report.

In the Pacific market – where Australia dominates – “pricing for most major lines of business is favourable, driven largely by abundant capacity, the absence of large losses and strong insurer performance in underwriting and investment returns”.

Aon says the entry of new Lloyd’s insurance providers and increased risk appetite among established carriers has lifted capacity in most business lines.

While underwriters have been flexible, they have been largely disciplined.

“In property, some pockets of risk, including placements with significant natural catastrophe exposures and/or claims, are experiencing a more challenging underwriting environment.”

Property pricing conditions were soft in Q4, as were the directors and officers, cyber and casualty lines. Motor was the only line considered “moderate”.

Aon says the property line has “continued to soften, supported by relatively benign major loss activity in 2025 and buoyant investment returns and underwriting results.

“Insurer growth ambitions are fuelling greater choice for insureds and the expansion of previously restricted coverage, improved natural catastrophe cover and improved policy conditions”.

In D&O, insurers are competing to retain or increase market share, Aon says.

“Large risks can achieve double-digit reductions at renewals, although more moderate decreases are typical for smaller companies. The competitive market is also providing opportunities for clients to obtain enhanced coverage, increased limits and reduced retentions.”

Aon says the casualty market is “in a good place as insurers’ ambitious growth targets continue to drive competition. Capacity is at its highest level since 2018.”

Casualty capacity is driven by new-entrant managing general agencies and new Lloyd’s players and consortiums.

“Preferred risks with clean loss histories are able to achieve double-digit decreases, while rates are generally flat for challenging risks like thermal coal or those with heavy attritional claims.”