What's Happening?
The Council of Insurance Agents & Brokers (CIAB) has released its quarterly survey indicating a continued softening in commercial property/casualty premiums across all account sizes in the second quarter of 2025. The average premium increase was 3.7%, down from 4.2% in the first quarter. This marks the 31st consecutive quarter of premium increases, although the rate of increase has slowed. Notably, umbrella premiums saw the highest increase at 11.5%, driven by legal system abuse. Premiums for large accounts moderated significantly, with a 45% reduction from Q1, resulting in an average increase of 2.9%. Meanwhile, small and medium accounts experienced slightly larger increases. The Ivan Index for July showed renewal rate changes, with decreases in commercial auto, businessowners policy, and commercial property, but increases in general liability, umbrella, and workers' compensation.
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Why It's Important?
The softening of commercial property/casualty premiums is significant for businesses as it may indicate a shift in market dynamics, potentially leading to more competitive pricing and better negotiation leverage for insurance buyers. The moderation in premium increases for large accounts suggests insurers are becoming more aggressive in pursuing these accounts, which could benefit large businesses seeking to reduce insurance costs. However, the continued rise in umbrella premiums highlights ongoing challenges related to legal system abuse, which could impact businesses facing liability risks. Overall, the changes in premium rates across various lines of business reflect broader economic conditions and insurance market trends, affecting stakeholders in the insurance industry.
What's Next?
As the market continues to soften, businesses may explore opportunities to renegotiate insurance terms and seek more favorable rates. Insurers might adjust their strategies to maintain competitiveness, potentially leading to further changes in premium rates. Stakeholders will likely monitor legal system developments that influence umbrella premiums, as well as broader economic factors impacting the insurance market. The CIAB and other industry groups may continue to provide insights into market trends, helping businesses and insurers navigate the evolving landscape.
