After years of steady premium increases, the commercial insurance market is beginning to ease—and that opens the door to smarter strategy. According to Q2 2025 data from The Council of Insurance Agents & Brokers, average premium increases fell to 3.7%, down from 4.2% in Q1. Large accounts saw the greatest improvement, with increases dropping from 5.3% to just 2.9%.
But this isn’t a return to “business as usual.” While some lines are softening, others like umbrella and commercial auto continue to harden. Business leaders who act now can rebalance spend, negotiate from strength, and avoid pitfalls that others may walk into.
Rebalance Risk Spend While Premiums Cool
A 45% drop in premium increases for large accounts is a clear signal: carriers are competing again, especially for well-managed risks. Even commercial property, which was one of the hardest-hit lines in recent years, saw an average increase of just 1.9% in Q2.
What to do:
Ask your agent or risk manager to model how today’s market shift could support strategic decisions like raising limits, tightening deductibles, or rebalancing underinsured assets. This is a good time to reevaluate your total cost of risk.
Redirect D&O Savings to Strengthen Other Lines
Not all premium changes are upward. Directors & Officers (D&O) coverage saw an average decrease of 2.5%, its sixth straight quarter of decline. Increased carrier competition and a profitable 2024 have brought welcome relief.
What to do:
Put those savings to work. Consider reinvesting them into umbrella or casualty lines where capacity is shrinking. Strategic reallocation helps maintain strong protection while keeping net spend stable.
Protect Against Litigation Risk Before It Hits Your Balance Sheet
Umbrella liability coverage jumped 11.5% this quarter, the highest of any line. Why? The continued rise in “nuclear” and even “thermonuclear” verdicts. Verdicts over $10 million are becoming more common and five corporate cases in 2024 exceeded $1 billion.
These losses don’t stay confined to primary policies. They pierce limits and trigger umbrella payouts, causing carriers to tighten underwriting and reduce available capacity.
What to do:
Review your legal exposure. Strengthen protocols around fleet safety, vendor contracts, and employee training especially in industries prone to litigation. Clean operations and documented controls give underwriters more confidence and pricing flexibility.
Compete on Risk Quality
More carriers are re-entering the market, but they’re being selective. Businesses with clear documentation, early engagement, and leadership involvement are getting better terms.
What to do:
Get ahead of your renewal. Organize five-year loss data, update safety protocols, and connect early with your broker. If you can present like a top-tier risk, you’ll negotiate like one.
What to Avoid Right Now
Some businesses are interpreting premium decreases as a reason to delay planning or cut back coverage. That can be risky. Underwriting standards remain high, and carriers are looking closely at where to deploy capacity. Weak preparation leads to missed opportunities or worse, non-renewals.
Strong Risk Strategy Starts Before Renewal
Q2’s data suggests this is the most favorable commercial insurance environment we’ve seen in years for those who come prepared. Flat or declining rates in some lines can be leveraged to improve overall protection. But volatility remains, especially in high-liability areas.
Before your next renewal cycle, take a fresh look at your risk strategy.
Reach out to Watkins Insurance Group for a coverage and cost analysis aligned with today’s shifting market.
