Better data and closer dialogue can help risk managers navigate rising loss volatility

Europe benefits from a stable commercial insurance market, supported by healthy capacity, strong competition and deep risk expertise. But shifting weather patterns, generative AI and growing geopolitical fragmentation continue to drive uncertainty, making high-quality risk data and closer dialogue between insurers, brokers and risk managers increasingly important.

A stable market faces evolving loss trends

Since risk managers last convened in Madrid, improving reinsurance conditions have increased capacity and competition across much of the European insurance market.

Property is especially competitive, European casualty risks are attracting greater interest, and capacity remains broad across financial lines and cyber. For businesses able to demonstrate strong controls and provide a clear picture of their exposures, these conditions can create opportunities to secure more tailored coverage.

The picture is more nuanced where losses remain elevated. Commercial motor continues to face higher repair costs and compensation awards in Europe and the US, while liability programs with significant US exposure remain under scrutiny. According to Marathon Strategies, in 2025 US corporate defendants faced a record 190 nuclear verdicts of $10 million or more, a 40.7% increase from the previous year.

Specialty lines are also facing greater volatility as the conflict in the Middle East continues to affect marine, aviation and political violence risks. In financial lines, rates for directors and officers insurance are beginning to rise again after almost three years of softening, amid higher insolvency rates, US securities class actions, cyber events and AI-related claims.

Climate extremes raise the resilience challenge

Although insured natural catastrophe losses were below average in the first half of 2026, the period produced a record number of billion-dollar insured loss events. June and July ranked among the warmest months globally, while Western Europe recorded its hottest June and July. Prolonged drought and extreme heat also fueled wildfires across Europe, with Spain and France among the hardest hit.

For commercial insurers, these trends reinforce the need to help businesses prepare for and adapt to changing weather patterns. Paying claims remains central, but insurers can also help clients act before a loss occurs. By combining climate data, claims experience and specialist expertise, they can target prevention and adaptation measures that reduce losses and strengthen resilience. Businesses can then prioritize critical assets, operational dependencies and the investments likely to have the greatest impact.

Cyber and AI risks are evolving rapidly

Cyber shows how quickly exposures can shift. While stronger risk management has helped bring ransomware losses under greater control among insured businesses, advanced AI models are reshaping the threat landscape. They may increasingly identify and exploit unknown vulnerabilities, compress the time between discovery and exploitation, lower barriers for less-skilled attackers and enable more autonomous attack chains.

The growing use of AI agents within businesses creates further exposures, including unintended access to sensitive data, insecure connections to external tools and actions taken without adequate human oversight. These developments make rigorous testing, access controls, monitoring and rapid patching increasingly important, while creating the potential for faster-moving and more correlated losses. This places risk managers in an important coordinating role, bringing together cyber, technology and operational perspectives to assess how AI changes the organization's exposure.

Recent work by AXA XL and Thales reinforces that cyber resilience is no longer solely a technical issue. Their joint analysis highlights the need for greater visibility of digital assets and dependencies, stronger oversight of third-party ecosystems, AI governance that keeps pace with deployment and crisis-ready leadership.

Yet the technologies creating new exposures can also help insurers and clients understand and manage risk more effectively.

Better data and AI can sharpen risk decisions

This market cycle also differs from the past in the availability and granularity of risk data, and the ability of AI to analyze it at scale. More data-led underwriting allows insurers to differentiate risks more clearly, but good decisions depend on context as well as volume. Clients that can demonstrate strong controls and explain how exposures are managed will be better placed to secure appropriate coverage and terms.

Better data and advanced analytics can reinforce underwriting discipline, support more risk-reflective pricing and provide a more predictive view of complex exposures, including cyber, climate, supply chain disruption and geopolitical instability. They can also help insurers and clients target prevention and mitigation more effectively.

AXA XL’s planned acquisition of specialist consulting firm S-RM reflects this shift, combining insurance insight with cybersecurity, geopolitical intelligence and crisis response expertise to help clients anticipate threats, strengthen prevention and respond more effectively. This integrated approach will be led by AXA XL’s newly created Risk Advisory business unit.

AI will also help automate insurance processes and enable underwriters to interpret risk information more efficiently. Its adoption must be supported by rigorous testing, explainability and appropriate human oversight. Used responsibly, it could deliver faster responses, greater choice and more customized products and services.

Collaboration will underpin a more resilient market

Events such as the FERMA Forum allow insurers, brokers and risk managers to compare perspectives on fast-evolving challenges. But collaboration must extend beyond the conference room: managing today’s uncertainty requires the continuous exchange of high-quality data, practical expertise and lessons learned.

That dialogue can help the market identify emerging exposures earlier, challenge assumptions and translate insight into more effective prevention and mitigation. Clients can provide insurers with a clearer picture of how exposures are evolving within their businesses, while insurers can bring data, claims experience and specialist expertise to help strengthen resilience.

As market conditions evolve, the value of insurance will not be defined by terms and conditions alone. It will rest on the industry’s ability to combine disciplined underwriting with better data and closer collaboration, helping businesses understand risk, prevent losses and navigate a more complex future with greater confidence.