The latest quarterly survey from The Council of Insurance Agents & Brokers (CIAB) reveals a notable shift in commercial property and casualty (P/C) insurance premium trends for the first quarter of 2025. Across all account sizes, commercial P/C premiums increased by an average of 4.2%, representing a significant slowdown—a 22% decrease from the premium growth observed in the final quarter of 2024. This decline serves as a strong indicator of a softening market environment in commercial lines.

Despite the fact that the first quarter marked the 30th consecutive quarter of rising premiums across all account sizes, there was a marked deceleration in medium-sized accounts. These accounts saw an average premium hike of only 3.6% during Q1, down sharply from a 6.4% increase in the preceding quarter. This shift suggests that competitive pressures are beginning to temper rate growth, especially among mid-tier commercial risks.

Survey participants noted an uptick in carrier involvement within the middle market, resulting in intensified competition. This heightened competition typically translates into more favorable pricing for insureds. According to respondents, underwriters are exhibiting greater flexibility in tailoring coverage to fit the specific needs of accounts. There is also a growing willingness among carriers to renew policies at flat rates or modest increases, provided the risk profile is deemed strong and favorable.

Examining premium trends by line of business, cyber insurance led the decline with an average premium reduction of 2.1% during Q1 2025. Directors & Officers (D&O) liability insurance also saw a decline, with premiums falling by 1.7%, while employment practices liability experienced a slight decrease of 0.4%. These decreases highlight the continuing softening in certain liability lines.

In contrast, commercial auto insurance bucked the general trend by registering the largest average premium increase of 10.4% in Q1, up from 8.9% the previous quarter. This rise reflects ongoing challenges and claims severity in that sector. Conversely, commercial property premiums experienced a marked slowdown, increasing by only 2.9% in Q1—a drop of more than 50% compared to the 6% hike seen in Q4 2024. The influence of greater competition was again cited as a key factor behind this moderation in rate increases.

Umbrella liability insurance continued its upward trajectory, with average premium increases of 9.5% over the past year. This figure marks a steady rise from increases of 8.7%, 8.6%, and 7.2% reported in the three previous quarters, respectively. The CIAB report also spotlighted the growing impact of third-party litigation funding (TPLF) on the market. According to survey respondents, TPLF is influencing not only the volume of claims but also driving up premiums and limiting coverage options.

One industry participant commented on the broader effects of escalating legal awards: “Nuclear verdicts have surged, pushing liability and excess insurance rates higher. This trend has reverberated throughout the entire litigation and claims ecosystem. We’re witnessing settlements and verdicts that exhaust all available layers of policy limits.”

Overall, the Q1 2025 CIAB survey underscores a shifting landscape in commercial P/C insurance, marked by emerging buyer-friendly conditions in many segments alongside continued challenges in others. As carriers adapt to increased competition and evolving market dynamics, agents and brokers may find more opportunities to negotiate terms and secure coverage for their clients in a softening market.