Commercial Insurance Rates Ease as Property Capacity Expands and Liability Costs Persist

Commercial buyers are finding the clearest pricing relief in property insurance, where capacity and competition are pushing rates down. Liability remains a tougher market: claim severity and reserve uncertainty continue to support increases, especially for excess and umbrella coverage. Executives at the Insurance Leadership Forum in Colorado Springs expect property reductions to continue into 2027, though the pace may slow.

Casualty costs keep pressure on liability

Marc Kunney, chief client officer at EPIC Insurance Brokers & Consultants, sees long-tail casualty reserves as a more likely source of the next major capital strain for insurers than a hurricane or other natural catastrophe. He pointed to excess and umbrella liability, commercial auto, products liability and public entity coverage as lines exposed to rising claim severity and adverse reserve development.

Pricing reflects that strain. Primary general liability rates are rising by low single digits, while North American excess liability rates are still increasing by double digits, said Pat Donnelly, Willis’ head of risk and broking for North America. Greater insurer appetite and capacity for well-managed primary risks have moderated increases, but Donnelly said the market hasn’t softened.

Higher court awards, settlements and third-party litigation funding are lifting claims costs, said Alex Wells, CEO of Zurich U.S. Reinsurers also remain reluctant to cut liability pricing. Wells said competition should keep casualty from entering a sharply harder phase, even as rates continue to rise roughly in line with loss trends in most cases.

Some liability segments are seeing slower rate firming. Danny Kaufman, president of Burns & Wilcox and co-president of H.W. Kaufman Group, said the moderation varies by class and remains less pronounced than in property. Directors and officers coverage has been softening for an extended period, he added.

Property relief comes with tighter margins

Property insurers are competing for business after years of substantial rate increases, supported by strong profitability and abundant capital. Kunney said straightforward risks can still secure reductions of about 20%, while more difficult property classes are seeing decreases of 5% or more.

Steve Boyd, CEO of Arrowhead Intermediaries, Brown & Brown’s wholesale and specialty unit, described the drop as the steepest he’s seen in his career. Excess capacity and competition are driving the declines, while legislative changes in Florida have improved conditions for insurers there. Still, Boyd said some accounts are nearing pricing levels that make profitability questionable.

Competition is also changing policy terms. Boyd cited insurers adding earthquake coverage that had previously been placed separately into broader all-risk policies, broadening earthquake definitions to include subsidence and reducing wind deductibles. “We’re starting to see T&C slip,” he said.

London insurers are also pursuing business with more flexible placements, said Jodi Kaufman Davis, group co-president of H.W. Kaufman Group and vice chair of Atain Insurance Cos. “There’s a hunger for business, so there is some flexibility,” she said.

Ryan Barber, Aon’s global head of property, expects reductions to continue through 2027, but sees room for the pace to ease after several years of declines. He described the market as “soft on the surface but volatile at the core,” citing catastrophe exposure, inflation, supply chain disruption and geopolitical uncertainty.

Cyber reductions slow

Cyber pricing is moving lower too, but the pace of relief has moderated. U.S. rates fell by more than 20% in the early stage of the soft market, which began in late 2022; this year, decreases have narrowed to the mid-single digits, said Shawn Ram, chief revenue officer at Coalition.

Ram expects pricing and coverage to stabilize further. “By no means am I claiming we’re going to enter a hard market, but I do think the market is going to stabilize further in terms of pricing, in terms of coverage,” he said.

The forum took place before Hurricane Isaias hit the Gulf Coast. News reports said the storm caused at least four deaths, while initial loss estimates indicated it was unlikely to materially affect property pricing. The broader market signal remains a split one: property buyers have room to negotiate, while liability costs and volatile exposures continue to limit insurers’ pricing flexibility.