Premium Growth Slows as Market Softens in Most Property and Casualty Lines

Premiums increased by an average of 4.2 percent in the first quarter of 2025, reflecting a continued upward trend for the 30th consecutive quarter but at a decelerated pace, according to the Council of Insurance Agents & Brokers (the Council) Commercial Property/Casualty Market Index Q1/2025. The report found that all account sizes experienced increases, with medium accounts slowing the most—from 6.4 percent in Q4 2024 to 3.6 percent in the first quarter of 2025.

Per the Council, the slowdown in premium increases was attributed to more competition and underwriting flexibility. Small and large accounts also saw slower growth, posting 4.5 percent and 4.7 percent increases respectively, compared to 5.2 percent and 5.6 percent in the previous quarter. The report noted that "competition in the market created more favorable outcomes for clients."

The report found that most lines of business showed signs of softening, with lower premium increases compared to the fourth quarter of 2024. Cyber, D&O, employment practices liability, terrorism, and workers compensation all recorded actual decreases. Insurers expanded capacity in D&O, prompting competitive pricing. According to the Council, underwriters re-entered the market across various lines, making coverage more accessible.

However, commercial auto and umbrella insurance diverged from the trend. Premiums in those lines increased by 10.4 percent and 9.5 percent respectively—the highest among all categories. The Council attributed the pressure in these lines to third-party litigation funding (TPLF), which respondents said drove up both claim frequency and severity, contributing to higher premiums.

According to the report, 82 percent of respondents cited TPLF as influencing market conditions, particularly in terms of rising verdict sizes and restricted limits. "Third-party litigation funding is hurting the consumer," one respondent from a large Southwestern firm said. In many cases, the report added, underwriters reduced coverage limits or withdrew capacity entirely for higher-risk exposures.

Underwriting scrutiny continued across multiple lines, with insurers applying tighter restrictions, reduced limits, and exclusions. The Council said 64 percent of respondents reported increased scrutiny, often in relation to lines affected by litigation risks such as commercial auto, umbrella, and cyber.

According to the report, 60 percent of respondents described insurer capacity as increasing, with many noting that newer entrants or returning players were targeting middle-market business. In contrast, 18 percent reported decreasing capacity, citing caution from insurers in loss-sensitive areas. These trends suggest that capacity growth remains uneven across the industry.

As pricing eases, exposure levels are expected to take on a larger role in premium determination. Per the Council, many respondents reported that underwriters are becoming more reliant on exposure data, such as revenue and headcount, to drive rate decisions. The shift aligns with a broader trend of underwriting based on economic and operational data rather than historic loss performance alone.