Lloyd’s has warned that several pressure points are emerging across the market as it moves into the final weeks of 2025, with particular focus on casualty pricing, cyber growth ambitions and the pace of property rate declines.
The corporation said these themes are shaping its view of risk as the market heads into the 2026 business planning cycle.
In its Q4 Market Messages briefing, Lloyd’s said casualty rates appear inadequate, while rapid cyber expansion may be outstripping the market’s capacity to absorb risk. It also reported that property rate softening is continuing at a speed the corporation considers problematic, putting pressure on the ability to sustain long-term return thresholds.
Those concerns sit within a wider softening trend across the Lloyd’s and London market, where recent analysis has highlighted falling property rates and a potential squeeze on underwriting margins.
A report by Oxbow Partners pointed to property rates dropping 9% in both Q1 and Q2 2025 and suggested that continued rate reductions could test profitability even as capital remains supportive.
The corporation said monitoring price adequacy against its long-term return hurdle remains a central priority as underwriting margins narrow. Management is continuing to test whether current rating levels can support target profitability across the cycle.
The briefing also pointed to ongoing structural shifts in distribution and placement. Oversight of cross-class facilities was characterised as deliberate and measured, while structured solutions were identified as a major area of expected growth.
Lloyd’s cautioned that follow-market business models could face increasing pressure as facility-led placement expands across classes. The corporation signalled that these changes may alter how capacity providers participate in syndicate portfolios and compete for share.
For 2026, Lloyd’s business plan projects £67.4 billion in gross written premium and a 91.2% net combined ratio. This compares with the latest 2025 forecast of £59.8 billion in GWP and an 88.7% combined ratio, alongside a 2025 syndicate business forecast of £61.9 billion and 89.7%.
Read more: London market faces emerging threats in 2026
According to the briefing, 62.5% of accretive growth is expected to come from new entrants and structured solutions. Like-for-like growth relative to the latest 2025 forecast is put at 2.3%, reflecting a more modest expansion from the existing platform.
Lloyd’s also reported a further reduction in expected 2025 risk-adjusted rate change, linking the shift to trading conditions. The corporation suggested this trend underlines the importance of underwriting discipline as pricing momentum moderates.
Looking ahead to oversight priorities for 2026, Lloyd’s set out themes of predictability, sustainable performance, consistent delivery of oversight and continued cooperation with the Prudential Regulation Authority.
That direction mirrors warnings from the International Underwriting Association (IUA) that the London market is entering a “year of evolving risk landscapes and regulatory scrutiny,” with cross-class issues, AI-related exposures and fast-moving litigation trends expected to shape results.
The market will remain under a principles-based oversight model that applies both to ongoing supervision and to the assessment of new entrants. Co-ordinated intervention strategies will continue to feature in Lloyd’s approach to managing underperforming or higher-risk segments.
The briefing closed with four core messages for the market. Lloyd’s emphasised that capital adequacy is strong, that 2026 like-for-like growth is expected to remain prudent, that sustainable profitability will require greater involvement from claims functions, and that predictable, principles-based oversight is now embedded as a core expectation for market participants.
