The latest market survey from The Council of Insurance Agents & Brokers reveals a noticeable easing in premium increases across all commercial insurance account sizes in the first quarter of 2025.
According to their findings, premium increases across all account sizes moderated to an average of 4.2%, a drop from the 5.4% rise reported in the last quarter of 2024.
This marks the 30th consecutive quarter of premium growth, though the pace of these increases is clearly slowing.
The most notable change was observed among medium-sized accounts, where the average premium increase fell sharply to 3.6%, down 42% from 6.4% in the previous quarter.
This shift is largely attributed to increased competition among insurers and greater flexibility from underwriters, with one industry professional from a large Northwestern firm commenting that insurers have “begun to re-engage with the middle market.”
Premium increases for large accounts also slowed, decreasing to an average of 5.3% from 6.3%, while small accounts maintained a steady growth rate around 3.6%.
Premium adjustments were not uniform across all types of insurance coverage. Most lines experienced smaller increases, with commercial auto and umbrella policies standing out as exceptions with the highest premium hikes, at 10.4% and 9.5%, respectively.
Several lines recorded declines in premiums, including cyber insurance, directors and officers liability (D&O), employment practices, terrorism, and workers compensation.
Workers compensation premiums declined the most, falling by an average of 2.6%, followed by cyber insurance at 2.1%, and D&O by 1.6%.
Employment practices and terrorism insurance saw more modest decreases of around 0.4%. The moderation in D&O premiums is believed to be driven by heightened market capacity and competition, as supported by multiple industry reports from early 2025.
A major influence shaping these market trends is the rise of third-party litigation funding (TPLF), which many respondents cited as a significant factor affecting claims frequency and severity, premiums, and even policy terms and coverage limits.
The commercial auto and umbrella lines have been especially affected by the impact of TPLF, contributing to the larger premium increases seen in these areas.
Underwriters are exercising greater caution, often imposing lower coverage limits or excluding certain types of risk altogether. One respondent from a prominent Southwestern firm noted that “third-party litigation funding is hurting the consumer,” reflecting concerns about its broader market effects.
Overall, the report paints a picture of a commercial insurance market that is adjusting to increased competition, greater underwriting capacity, and the influence of emerging legal financing trends.
While premiums continue to rise, the slower growth and the decline in several key lines suggest a gradual easing after many quarters of steady increases.
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