CIAB: US commercial insurance rate increases slow to 4.2%

By Michael Loney

May 16 - (The Insurer) – U.S. commercial insurance premiums rose by an average of 4.2% in Q1 2025, a sequential deceleration from the 5.4% reported by respondents in Q4 2024, including property rate increases halving to 2.9%, according to the Council of Insurance Agents and Brokers.

Q1 2025 was the 30th consecutive quarter of increases for all account sizes in the CIAB’s property casualty market survey.

“There were clear signs of softened market conditions this quarter, a continuation of a trend in 2024 of flat to lower premium increases for most account sizes and most lines,” CIAB said.

Increases for medium accounts slowed the most out of all account sizes, at an average of 3.6% for Q1 2025 compared with 6.4% in Q4 2024.

Large account increases of 5.3% in Q1 2025 compared with 6.3% in Q4 2024, while small accounts stayed steady at an average increase of 3.6% in both quarters.

Only commercial auto and umbrella had higher premium increases in this year’s first quarter than in the fourth quarter of last year.

Five lines recorded decreases in premiums: cyber, D&O, employment practices, terrorism, and workers’ compensation.

Cyber premiums fell by an average of 2.1%, the third record-low premium change for the line in the past year.

The 1.7% fall in D&O was the fifth consecutive quarter of premium decreases for the line.

One survey respondent suggested more capacity and more competition may have influenced premium trends for the line.

One respondent from a large Northwestern firm said that in Q1 2025 there were a “couple new D&O entrants with extremely broad coverage,” adding: “We have seen excess markets walk away from renewals due to it. That is new since in the past two years incumbents would do anything to keep their renewals.”

Premium increases for commercial property slowed to 2.9% this quarter, down from Q4 2024’s 6.0% increase. CIAB highlighted that this line regularly had the highest increases in 2023 and 2024.

Survey respondents described commercial property market conditions as increasingly competitive.

One respondent from a large Southeastern company said new underwriter flexibility on commercial property risks allowed them to push for better terms on renewal, such as lower deductibles or higher limits and sublimits.

Commercial auto in Q1 2025 had the highest increase in premiums at an average of 10.4%, followed by umbrella’s 9.5% increase.

Respondents pointed to third-party litigation funding as one of the factors driving the increases for both auto and umbrella.

They said third-party litigation funding affects not just the amount of claims and claim amount but also the availability of certain coverages, such as umbrella, auto, and product liability.

The release of CIAB’s survey follows Marsh’s global insurance market index also suggesting signs of softening in the U.S.

Marsh’s index showed U.S. commercial rates fell 1% on average in the first quarter of this year, compared with flat change in Q4 2024.