Property insurance market stabilizes, rate outlook favorable: USI

Commercial property insurance buyers with favorable risk profiles will see rate decreases or low-single-digit increases this year as the market stabilizes, according to a report issued Tuesday by USI Insurance Services LLC.

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Ample capacity is available following favorable underwriting results for insurers and reinsurers, USI said.

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“With natural catastrophe insured losses around $135 billion globally in 2024, according to Swiss Re, policyholders can expect insurers to remain vigilant in risk selection and deductible levels, although some rate relief is expected for favorable risk profiles,” the report said.

Accounts with poor loss experience will likely see rates increase by 5% to 15% in the first half of this year, compared with 10% to 20% increases in the second half of 2024.

Certain risks, such as senior housing and frame apartments, remain difficult to place, and wildfire and severe convective storm exposures continue to impact available capacity, USI said.

In casualty lines, workers compensation rates and premiums are continuing to decline overall but at a much slower pace than in prior years.

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Declining claims frequency and moderate loss severity trends continue to benefit the coverage line, but “headwinds are building as net profit margins are shrinking,” the report said.

In commercial auto, general/product and umbrella/excess liability lines, capacity remains adequate, and rate increases are stabilizing overall for most buyers, the report said.

Average primary general and product liability rates are expected to be flat to up 10% in the first half of the year. Umbrella and excess liability rates will be flat to up 10% for middle-market companies, and flat to up 15% for larger companies, the report said.

However, capacity deployment remains discretionary and rising rate pressures persist for buyers that have experienced large losses and for tougher classes of business such as transportation, habitational, certain manufacturing classes and life sciences, the report said.