Commercial property insurance buyers saw double-digit rate decreases at year-end renewals as ample capacity and lower-than-expected catastrophe losses fueled fiercely competitive market conditions.
While 2025 began with catastrophic California wildfires, hurricane season ended with no major storms, and new capital entered the market as insurers looked to grow their property books.
Buyers will see continued softening this year, providing the property line remains profitable, brokers say. Insurers saw favorable Jan. 1 treaty reinsurance renewals where rate reductions averaged as much as 20% on catastrophe programs.
The average rate reduction on Aon’s national property book through the fourth quarter was 12.5%, said Vincent Flood, New York-based U.S. property practice leader.
Shared-and-layered programs saw reductions averaging about 16%, while single-insurer programs saw mid- to high-single-digit decreases, Mr. Flood said. Policyholders using the alternative risk and capital markets can obtain an additional 10% rate decrease, he said.
Property remains a growth area for insurers, with five or six new markets in Bermuda recently adding $25 million of catastrophe capacity, which is driving competition, Mr. Flood said.
The market will “continue to soften to the tune of 10% to 15%,” he said.
The lack of major hurricane losses in the past three years has led to increased capital and competition, said Joffre Mishall, Chicago-based head of large property at Zurich North America.
“A lot of people want to take advantage of the profitability in our market right now. It’s been challenging,” he said.
Rate changes are based on individual customer exposures, including physical protection, how they are managing safety and protecting facilities, catastrophe footprint and loss history, Mr. Mishall said.
“While some accounts see rate decreases, others may experience rate increases,” he said.
Catastrophe-exposed accounts are seeing the largest rate decreases, with some as high as 40%, said Gregory Mann, Atlanta-based U.S. property placement leader for Marsh.
Single-insurer accounts, which started the year flat, became more competitive, Mr. Mann said. In cases where an account moved from one market to another, “you could see a single carrier account drop 25% or 30% year over year again,” he said.
Clients have made long-term investments in strengthening their properties, and the market is rewarding them for it, he said.
Ample capacity is driving down rates and significantly improving terms and conditions, said Jeff Buyze, Orlando, Florida-based national property practice leader at USI Insurance Services.
Single-insurer programs face fierce competition from shared-and-layered programs. In some cases, long-time incumbent single insurers are being displaced by capacity from domestic, London or Bermuda markets, Mr. Buyze said.
A USI auto service center account with catastrophe exposure and a nationwide distribution warehouse footprint with approximately $1 billion in total insured values achieved a 47% rate decrease at renewal, he said.
“Not only did the incumbent quote, we had a shared-and-layered program, we had three additional options for them to choose from as single-carrier. That’s the type of competitiveness we’re seeing in the marketplace right now,” he said.
Advanced ceramics maker CoorsTek expects a flat to low-single-digit decrease at its March 1 renewal for its single-insurer global property program, said Ondrea Matthews, senior director of risk management and benefits at the Golden, Colorado-based company.
“We are looking to reinvest that money back into the business and capital expenditure and maintenance projects, shoring up some of those potentials to decrease the loss ratios and the loss expectancies,” said Ms. Matthews, a Risk & Insurance Management Society board member.
CoorsTek, which has total insured values in the low-billion dollars, has a longstanding relationship with its property insurer, which offers membership and resiliency credits and competitive pricing compared with other insurers, she said.
That insurer is implementing a 2% hail deductible on CoorsTek’s policy from March 1, she said. A location in Benton, Arkansas, has been added to the “very severe hail zone,” in addition to the company’s plants in Golden, she said.
Rate relief previously seen on shared and layered programs has expanded to single-insurer accounts, including small to medium-sized businesses, said Martha Bane, Glendale, California-based property practice leader at Arthur J. Gallagher & Co.
Additional managing general agency and specialty-product capacity is targeting single-insurer placements, she said. As insurers look to grow, “they’re expanding their appetite into areas that they would not necessarily have had access to or interest in the past,” she said.
“In the last couple of years, everyone has flocked to this high-return, high-risk shared-and-layered space. What does that become? Oversaturated. We’re seeing oversubscription in certain layers, anywhere from 200% to 400%,” she said.
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