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%, a decrease from the 4.2% increase observed in the first quarter. This marks the 31st consecutive quarter of premium increases, although the rate of increase has moderated. Notably, umbrella premiums saw the highest increase at 11.5%, driven by legal system abuse. Conversely, premiums for directors & officers, employment practices, terrorism, and workers’ compensation saw decreases. Large accounts experienced the most significant moderation, with premium increases falling by 45% from Q1 to an average of 2.9%. The Ivan Index for July also reported changes in renewal rates, with decreases in commercial auto, businessowners policy, and commercial property, while general liability, umbrella, and workers' compensation saw increases.
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Why It's Important?
The softening of commercial property/casualty premiums is significant for the insurance industry, indicating a shift in market dynamics. Lower premium increases can benefit businesses by reducing operational costs, potentially leading to increased investment and growth. However, the continued rise in umbrella premiums due to legal system abuse highlights ongoing challenges in managing liability risks. The moderation in large account premiums suggests increased competition among carriers, which could lead to more favorable terms for large businesses. This trend may influence strategic decisions in risk management and insurance procurement across various sectors, impacting overall economic stability and growth.
What's Next?
As the market continues to soften, insurance carriers may adjust their strategies to maintain competitiveness, potentially leading to more aggressive pursuit of large accounts. Businesses might leverage this environment to negotiate better terms and reduce insurance costs. The ongoing legal system abuse affecting umbrella premiums may prompt industry stakeholders to advocate for reforms to mitigate liability risks. Additionally, the observed changes in renewal rates could influence future pricing strategies and product offerings by insurance providers, shaping the landscape of commercial insurance in the coming quarters.
