Soft Market Emerges as Commercial Insurance Premiums Flatten in Q4 2025

The insurance market has entered a pronounced soft phase, with commercial property and casualty premiums rising just 0.2% on average in the fourth quarter of 2025, a dramatic deceleration from the 1.6% average increase in Q3, according to The Council of Insurance Agents & Brokers’ Q4 2025 Market Index

Softening conditions manifested across nearly every segment of the market in Q4, according to the report. Nine lines of business—including commercial property, cyber, and workers’ compensation—recorded premium decreases. This represented a notable expansion from just six lines showing declines in the previous quarter.

Two Lines Bucking the Trend

Despite the broader softening, commercial auto and umbrella coverage continued to defy market pressures, the CIAB said.

Commercial auto premiums increased 6.6% — the highest among all lines — marking the 58th consecutive quarter of increases dating back nearly 15 years. Analysis from AM Best revealed that the average commercial auto claim cost more than doubled between 2015 and 2024, rising annually at rates around 8% — nearly triple the overall economic inflation rate. These mounting claim frequencies and severities, driven by social inflation and elevated jury verdicts, continued to constrain carrier capacity and support premium growth for commercial auto, the report said.

Meanwhile, directors & officers liability insurance experienced the steepest declines, with premiums falling 3.8% in Q4—the eighth consecutive quarterly drop for this line.

Abundant carrier capacity and exceptionally favorable loss ratios in 2024—described by a 2025 AM Best report as “one of the best results in a decade” — enabled insurers to price more competitively. In a more recent 2026 report, AM Best indicated that downward pressure on D&O pricing may be moderating.

Diverging Fortunes Across Account Sizes

Premium movements varied significantly by company size in Q4, according to the CIAB report.

Softening premiums was particularly pronounced in the large and medium account segments. Large account premiums fell 2.1% on average, marking the first decline since the last soft market in Q4 2017, while medium account premiums remained flat at 0%.

According to CIAB member firms surveyed, heightened competition and increased carrier capacity for these segments drove down pricing pressure. “More competition, mostly on the upper middle market and large,” pushed premiums down, noted one respondent from a large Northeastern firm.

Small account premiums rose 2.8%, outpacing all other account sizes despite showing more moderation in Q3.

This divergence underscores how market conditions are unfolding unevenly, with particular pressure channeled to smaller accounts while larger enterprises benefit from intensified competition for their business.

Obtain the full report here. &