Commercial Insurance Market Softens in Q3 as Competition Heats Up

The commercial property & casualty market showed clear signs of softening in the third quarter of 2025, with average premium increases slowing to just 1.6%—the lowest in 32 quarters—driven by intense carrier competition, according to the latest Commercial Property/Casualty Market Index from The Council of Insurance Agents & Brokers.

The third quarter’s average premium increase was 57% lower than the 3.7% average increase recorded in the prior quarter, with increases moderating significantly across all account sizes, according to the CIAB’s quarterly survey of member firms.

For the first time in years, premium hikes for small, medium, and large accounts were all below 2%. Small accounts saw the most pronounced change, with average premiums up 1.2% after a 4.2% jump in the previous quarter. Medium accounts rose 1.9%, down from 4.0%, and large accounts climbed 1.6%, compared with 2.9% in Q2.

One survey respondent from a large Northwestern brokerage firm attributed the decline in premiums for small accounts to carriers being “aggressive towards small business for a while.”

Competitive pressure was a common theme, with respondents noting that carriers were more aggressive in winning new business, the report said.

The number of lines experiencing premium decreases expanded to six from five in the prior quarter, now encompassing business interruption, commercial property, cyber, directors and officers liability, employment practices and workers’ compensation.

While most lines of insurance saw softer premium increases, commercial auto remained an outlier with the highest average increase at 7.4% in the third quarter. Umbrella saw average increases of 5.5%, but that was down sharply from an 11.5% increase in the previous quarter.

Capacity Surge Drives Down Property and Cyber Premiums

Two key lines of business—commercial property and cyber—experienced premium decreases driven by an influx of underwriting capacity, according to the report.

Commercial property premiums fell by an average of 0.2%, the line’s first decrease since 2017, and a dramatic shift from a 7.9% premium increase a year earlier.

This reversal was fueled by a wave of new carriers and managing general agents (MGAs) entering the market, as well as some insurers that exited in 2023 returning, which created a glut of capacity, according to the report. A softened reinsurance market also provided primary carriers with cost relief that was passed on to insureds.

Similarly, cyber premiums saw the largest drop of any line, falling 2.6% for a record fourth decrease in the past six quarters. According to the CIAB’s report,  abundant capital from a favorable reinsurance market and a growing cyber insurance-linked securities (ILS) market, combined with high demand for coverage, created what Aon termed a “supply-demand imbalance” that resulted in a buyer-friendly market.

Implications of a Competitive Landscape

The confluence of increased capacity, carrier competition and moderating rates created advantageous conditions for insurance purchasers in the third quarter, the report said.

The shift proves particularly notable given the hard market conditions that dominated in 2023, when restricted capacity and challenging reinsurance markets drove commercial property premium increases as high as 20.4%.

This environment forces carriers to compete more aggressively on pricing and terms to win and retain business. According to Amwins, “common sentiment is that this is one of the most rapid erosions of property market conditions in decades,” the report noted.

Obtain the full report here. &