Property Rates Fall in Q2 For Fifth Straight Quarter While Casualty Lines Stay Under Pressure

Commercial property pricing fell 8.1% in the second quarter of 2026, deepening from a 7.1% decline in the first quarter and marking the fifth consecutive quarter of negative pricing, according to The Baldwin Group’s Q2 2026 Market Pulse report.

The trend line, which peaked near 20% in early 2023, has shown no sign of finding a floor, the broker’s report said. Shared and layered placements are seeing the deepest reductions as buyers use abundant excess capacity to restore limits, negotiate deductibles and broaden terms that were cost-prohibitive during the hard market. Well-documented, loss-free accounts remain the primary beneficiaries, though insurers continue scrutinizing insurance-to-value accuracy, rebuild-cost assumptions and catastrophe exposure, particularly as tariff-driven material costs and labor shortages extend replacement timelines, the report said.

Reinsurance market conditions are reinforcing the softening, according to the report. Mid-year reinsurance renewals showed risk-adjusted global property catastrophe rate-on-line pricing declining roughly 16%, deepening from a 12% decline at Jan. 1 renewals. A strengthening El Niño has also pushed the 2026 Atlantic hurricane outlook below normal, with the latest forecast calling for roughly nine named storms and a single major hurricane, down sharply from preseason estimates, the report said.

Baldwin said primary pricing, reinsurance and catastrophe modeling are now aligned in the same direction heading into the third quarter.

Casualty Lines Decelerate But Remain Elevated

Commercial casualty lines continued rising in the second quarter, though at a slower pace than earlier in 2026, as structural pressures from social inflation, litigation funding, mass tort activity and nuclear verdicts kept loss severity elevated, according to the report.

Commercial auto pricing increases moderated to 4.5% in the second quarter, down from a 5.7% average rise in the first quarter and the lowest quarterly reading in more than three years, Baldwin found. The report said it does not view the two-quarter moderation as a shift in the line’s structural pricing issues, noting that combined loss ratios above 100% persist industrywide. Total-loss frequency climbed to a record 23.1% of auto claims as rising repair costs push more vehicles past the total-loss threshold, and tariff-driven cost pressure is expected to add roughly 4% above baseline increases as import tariffs on vehicles, parts and repair materials work through claims costs, typically with a 12-to-18-month lag, according to the report.

Separately, 2024 nuclear verdict data showed a 52% year-over-year increase to 135 verdicts totaling $31.3 billion, with a median award of $51 million, the report said.

General liability pricing increases decelerated to 4.5% in the second quarter, down from 6.1% in the first quarter and from a peak of 9.3% in the fourth quarter of 2025, according to Baldwin. High-hazard sectors including construction, real estate, healthcare and hospitality continue to face the steepest increases, the report said, while jurisdictional concentration in plaintiff-friendly venues remains a key pricing factor.

The report flagged a pickup in competition among multi-line carriers for better-performing, lower-hazard GL risks as property pricing softens. Umbrella pricing eased to 5.0% in the second quarter from 8.2% in the first quarter, though Baldwin said the “through-line for umbrella pricing remains upward,” with habitational, healthcare, contractor and fleet risks facing disproportionate rate pressure.

Shorter-Tail Lines Show More Stability

Workers’ compensation pricing moved toward flat at negative 0.3% in the second quarter, compared with negative 1.0% in the first quarter, according to the report. Baldwin said medical severity continues climbing due to specialty pharmacy costs, hospital pricing and aging-workforce injuries, and it characterized the favorable pricing environment as nearing, or already at, its floor.

Private management liability pricing rose 0.9% in the second quarter, easing from 3.3% in the first quarter and 4.8% in the fourth quarter of 2025, the report said. Primary public directors and officers pricing fell 1.72% in the second quarter, a steeper drop than the first quarter’s near-flat negative 0.29%, while total D&O program pricing declined 2.42%, a moderation from a 3.5% drop in the first quarter. Securities class action filings reached 113 in the first half of 2026, putting the year on pace to exceed 2025’s total of 188, according to Baldwin.

The cyber market reached “a period of measured stability” at 0.4% in the second quarter, with claim frequency declining even as severity rises from ransomware, AI-enabled social engineering and business email compromise, the report said.

Obtain the full report here. &