Market Softening Continues, but Friction Persists
In Q2 2025, the commercial property & casualty insurance market storm further softens, continuing a long-term trend, yet a few stubborn cost pressures remain.
Premium Growth Slows Across the Board
Insurance costs are still on the rise, but the pace is slowing a bit. According to the CIAB, premiums in Q2 went up 3.7% across all account sizes, compared to 4.2% in Q1. That makes it the 31st quarter in a row, nearly eight years, of increases.
For organizations, this means budgets will continue to feel the pressure of higher insurance costs, though the hikes aren’t quite as steep as they were earlier in the year. The bigger picture? Rising premiums have essentially become the new normal, and it’s something companies need to keep planning for in the long run.
Large Accounts Show Greatest Relief
We’re starting to see the pace of insurance premium hikes slow down. In Q2, large accounts felt this the most. The average increase was down 2.9% from Q1, which is about a 45% drop in how fast costs were climbing. For big organizations, that’s a sign the market is loosening a bit and there may be more room to negotiate at renewal.
Smaller and mid-sized accounts also saw premiums tick up, but the good news is the sharp spikes we saw in Q1 didn’t repeat this quarter.
Bottom line: insurance costs are still going up, but the trend is softening. For larger organizations, this could be a window of opportunity, and for everyone else, at least the escalation isn’t as steep as before.
Winners & Persistent Pressures
- Umbrella coverage is still the most expensive line, with rates up to 11.5% in Q2, the steepest increase across all coverages. This is largely driven by nuclear verdicts, and legal system abuse.
- Major Liability lines including commercial auto and general liability all rose by 4.9%, the same as Q1. These coverages remain under pressure and will keep straining budgets. Organizations that rely heavily on vehicles or have high public-facing risks should pay special attention.
- Softening in Key Liability Lines: D&O fell 2.5% while cyber, employment practice liability (EPLI), and workers’ comp also came down. That’s a positive sign. After years of steep costs, these lines are finally easing up. It may give organizations a chance to restore limits or expand coverage that had been cut back when pricing was higher.
- Commercial Property premiums rose only 1.9%, which is almost 70% lower than at the end of 2024. After years of sharp increases driven by natural disasters and reinsurance pressures, it’s a relief to finally see property costs leveling off. Since property is often one of the biggest insurance expenses, this slowdown could give organizations a little more room in their budgets.
Key Drivers & Market Dynamics
Nuclear Verdicts surged in 2024, more than 50% compared to 2023. Insurers are pricing this risk into liability and umbrella coverage, leading to higher premiums, tighter underwriting, and less available capacity.
Thermonuclear Verdicts nearly doubled, from 27 to 49. These extreme cases ripple through the entire market, raising settlement expectations and making high-limit coverage more costly and harder to secure.
Reduced Capacity: Insurers are offering smaller umbrella limits than in the past. This makes it harder, and more costly, for organizations to build the coverage towers they need.
Final Takeaways
The market may be softening overall, but not every line is moving in the same direction. That is why it is so important to engage early, design programs thoughtfully, and stay proactive with risk management to secure the best outcomes. Connect with your Client Executive today to schedule a program review. Together, we’ll prepare for upcoming renewals, fine-tune your coverage, and set your organization up for long-term success.
