Executives see a buyer’s market returning for some insurance lines

CHICAGO – Risk managers are seeing a commercial insurance market in transition, with property rates falling, in some cases sharply, while liability rates continue to increase, brokerage and insurer executives say.

More capital is entering the market as existing insurers increase capacity and new insurers and managing general agents establish operations in the United States and international markets, they say.

Macroeconomic uncertainty has not yet affected insurers, but higher inflation related to tariffs could have an impact, they said last week during interviews at Riskworld, the Risk & Insurance Management Society Inc.’s annual conference.

“The overall sentiment that we’re seeing is that this is very much transitioning into a buyer’s market with capacity ample in practically all lines of business,” said Jonathon Drummond, Chicago-based head of broking, North America, at Willis Towers Watson PLC.

New capacity continues to enter the market, particularly in the property sector, he said.

Property

Property rates, especially on shared and layered programs with multiple insurers, are declining, Mr. Drummond said. Barring a major catastrophe, rates should continue to decline in the remainder of 2025, he said.

Property rates began falling last year, and the declines have accelerated this year as competition from new and existing insurers has intensified, said Martha Bane, Glendale, California-based property practice leader at Arthur J. Gallagher & Co.

“It’s been pretty dramatic in the past six weeks,” she said.

Shared and layered programs are seeing double-digit percentage decreases and capacity is sufficient for most policyholders, Ms. Bane said.

“We don’t see any issue aligning our clients’ capacity needs with what’s available in the market, and in most cases it’s an over-subscription,” she said.

Terms and conditions are also improving for some clients, Ms. Bane said. While deductibles are not being lowered generally, on some shared and layered programs they are more consistent throughout the programs, she said.

Shared and layered property programs are seeing the biggest decreases, risk-engineered business is declining to a lesser extent, and middle-market and packaged rates are holding steady, said Marc Orloff, president of global risk solutions, North America, at Liberty Mutual Insurance Co.

The property market remains “fragile,” said Malcolm Roberts, CEO of FM.

The insurer, which is a mutual, offsets some of the pressure to reduce rates via membership credits and is seeing flat or slightly lower rates at renewals this year, he said.

But the market has already seen significant catastrophe losses from wildfires in California, and the Atlantic hurricane season, which begins in June, could bring more large losses, Mr. Roberts said.

Marsh LLC is seeing an improving market for commercial insurance buyers, said Michelle Sartain, New York-based president of Marsh U.S. and Canada.

“Outside of casualty, the market is relatively favorable for our clients after a number of years where we’ve gone through increasingly challenging pricing,” she said.

Risk retention

Despite the changing market, many policyholders have mature captives and are seeking to retain more risk, Ms. Sartain said.

“If they can retain some of their own risk and partner with the insurance carriers to structure a program that they think makes sense, we’re increasingly seeing clients do that,” she said.

According to Marsh data, in 2024, large captives managed by the brokerage retained 8% more risk than the prior year.

Despite rate decreases, significant parts of the property market remain attractive to insurers, said Tracey Ant, head of middle and large commercial at The Hartford Insurance Group Inc.

“For our portfolio, we are comfortable with where the prices are. We still see it as an opportunity,” Ms. Ant said.

Policyholders are increasingly installing loss prevention technology, such as water sensors, to reduce property risks, she said.

Broadly, the U.S. market is profitable for underwriters, said Shanil Williams, CEO Americas at Allianz Commercial.

The company is looking to expand its presence in the excess and surplus lines market, he said.

Allianz writes E&S business through its specialty coverages, program business and alternative risk transfer division, but Mr. Williams said, “We want to bring a bit more clarity to the marketplace in terms of how we trade. “

Liability

As court awards and settlements keep rising, insurers continue to increase liability rates, Mr. Drummond of Willis said.

Liability rates remain firm, though insurers work with policyholders to restructure programs, particularly on excess liability placements, to relieve some pressure, Ms. Ant said.

Excess liability rates are rising the most, Mr. Orloff of Liberty Mutual said.

“In excess liability, we’re seeing 15% to 20%; auto we’re still seeing 10% to 15%; general liability is a bit less; and lead umbrella is still fairly strong,” he said.

Tariffs

The threat of increased tariffs, which many observers say could lead to higher costs for replacement parts and construction materials, is causing some uncertainty in the market, executives said.

The business environment is “challenging, complex and dynamic,” Mr. Orloff said.

Nevertheless, insurers are well placed to react, he said.

“Inflation is not new,” Mr. Orloff said. “We have vast amounts of data.”

Insurers’ experience during and after the COVID-19 pandemic should help them navigate the changing macroeconomic environment, Mr. Williams said.

“The industry has learned a lot around things like valuations, the increased cost of replacing fire losses, with materials coming from different places,” he said.

“We’re all prepared to make a change if we have to, depending upon what happens, but it’s hard to gauge, so you have to be nimble,” Ms. Ant said.

Given the uncertainty surrounding tariffs and other macroeconomic trends, policyholders can use digital tools to conduct scenario planning, Ms. Sartain said.

“You can help your clients understand that if they shift suppliers in certain regions it might impact the cost structure of some of the products that they deliver,” she said.