Lockton Report Reviews Economic Conditions and Insurance Market Trends

Lockton's September 2025 report, Keep Your Eye on the Ball, outlines economic conditions, insurance market performance, and sector-specific developments.

According to the executive summary, the report emphasizes that inflation, interest rate policy, and geopolitical tensions continue to influence insurer strategies and capital allocation. Lockton noted that stability has returned in many insurance lines, but insurers remain alert to litigation pressures, catastrophe exposures, and cyber risk.

Open economic questions persist, particularly regarding monetary policy. Lockton said the Federal Reserve's future actions remain uncertain as inflation cools but has not yet reached long-term targets. The report also pointed to risks from slower growth in China and Europe, as well as potential US fiscal constraints.

Per the report, the property and casualty (P&C) market has shown resilience through 2025. Competition has reemerged in some areas, though insurers remain disciplined in underwriting. Lockton observed that reinsurance capacity remains selective, especially for catastrophe-prone exposures.

Lockton highlighted the rapid expansion of data centers, driven by artificial intelligence, cloud services, and digital infrastructure. The report said this boom brings new construction, property, and liability risks, as well as potential vulnerabilities in supply chains and energy availability.

In the property market, insurers continue to monitor catastrophe losses closely. According to Lockton, underwriters are cautious with geographic exposures in hurricane- and wildfire-prone regions, even as overall capital levels have improved since the peak of the hard market.

Workers compensation remains a stable and profitable line. Lockton noted that claim frequency trends and medical inflation have been favorable, though demographic changes in the labor force and the rise of gig-economy work may shift long-term exposures.

The report said liability markets are under strain from social inflation and litigation financing. Lockton observed that nuclear verdicts and expanding class-action activity have increased insurer caution, particularly in industries with high public exposure. Terms and capacity remain carefully managed despite some pricing stabilization.

Executive risk exposures continue to evolve, according to Lockton. Directors and officers liability insurers face growing claims tied to securities litigation; environmental, social, and governance disclosures; and regulatory oversight. The report emphasized that governance and transparency remain central to underwriting decisions.

Cyber insurance remains highly dynamic. Lockton reported that while rate increases have moderated, underwriting standards remain strict, with a focus on ransomware preparedness, data protection, and regulatory compliance. Demand for coverage continues to climb as organizations prioritize resilience against evolving cyber threats.