US commercial insurance market stabilising but with some challenges

There are signs of continued resilience across much of the US commercial insurance market, although underlying pressures could test stability later this year, according to US broker the Baldwin Group. Its Q1 2025 Market Pulse Report shows that across its book of business, cyber, management liability and workers’ compensation lines maintained relative stability through the first quarter of 2025, with innovations in underwriting, sustained carrier capacity and moderating loss trends contributing to a favourable environment for insureds. However, commercial auto and umbrella lines continue to show signs of loss cost pressure, with pricing continuing its upward trend, with both seeing over 10% year-over-year increases, driven by entrenched loss trends, rising repair costs and social inflation, says Baldwin. “The market is stable in many areas but is not without its challenges,” said Trevor Baldwin, chief executive officer of The Baldwin Group. “Our focus remains on helping clients stay ahead of shifting conditions – whether by reassessing coverage structures, finding opportunities to mitigate cost pressures, or strengthening overall resilience strategies for growth.” The report notes that favourable reinsurance renewals, broader market competition and expanded capacity from MGAs and the London market contributed to recent softening trends, particularly in property. However, it adds that continued climate volatility, inflation, and evolving regulatory factors could influence the market trajectory over the remainder of 2025. The US commercial property insurance market saw a year-over-year deceleration in rate increases from 13.2% in Q1 2024 to 3.% in Q1 2025, despite ongoing climate-driven loss activity, the broker reports. “Clients with exposure to peak catastrophe zones should remain vigilant to account-specific reversal of these trends after a series of early-year natural disasters, including California’s January wildfires that significantly impacted catastrophe budgets,” says Baldwin. The report says uncertainty remains as to whether the deceleration trend will continue through 2025 as the industry deals with heightened frequency and severity of natural disasters and how reinsurers will respond. General liability pricing trends decelerated slightly from 7.2% in Q3 2024 to 5.2% in Q4 2024. “In aggregate, pricing trends are somewhat stable with pockets experiencing greater pricing volatility than others. The difference is most stark between industries, where the most likely source of litigation is a member of the public versus another business, due to legal system abuse concerns that plague the industry. Concern around prior-year reserve adequacy and the potential for adverse development still lingers and will be a key area of focus in 2025,” the report states. Commercial auto pricing trends showed a slight decrease in Q3 2024 to Q4 2024 from 10.8% to 10.3% but the overall trend continues upwards, says the report. Workers compensation pricing changed slightly from down 2% in Q3 2024 to down 1.3% Q4 2024, the seventh consecutive quarter of negative pricing, says Baldwin. The private company D&O market remains stable, with healthy capacity available for insureds with strong financials and a favourable loss history, it continues. The soft public company D&O market persists due to a general supply/demand imbalance across the marketplace. The EPLI market remains steady overall, with a healthy level of capacity available for clean risks. The report notes a stabilisation in pricing for cyber insurance. Competition between new market entrants and incumbent insurers to retain and acquire business has created ample capacity despite the increasing loss frequency, concerns about widespread events, AI-linked cyberattacks, regulatory obligations and state-sponsored cyberattacks, says the report.

US commercial insurance market stabilising but with some challenges

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