Commercial insurers are finally seeing signs of relief after seven years of significant rate increases, with the expectations that premiums pricing will soften going into the next year, Woodruff Sawyer said in a report.
In its “2025 Property & Casualty Looking Ahead Guide,” the independent insurance brokerage and consulting firm said it expects flat to low single-digit increases in premiums prices across various business lines and industries next year.
These increases are being affected by improving profitability across the industry, easing inflation and rising investment income by insurers. Another factor could be the lack of pressure from the reinsurance market, the company said.
The US property and casualty industry’s combined ratio fell to 98% in the first half of 2024, from 103% in the same period last year. Carolyn Polikoff, president of commercial lines at Woodruff Sawyer, said businesses will likely benefit from more favorable insurance pricing.
This year, commercial insurance carriers have seen a growth in participation in their programs, as well as writing new business. Most of the carriers, the company said, remain profitable despite an increase in frequency of catastrophic events, like Hurricanes Helene and Milton, as well as insured losses.
“Looking ahead to 2025, we anticipate rates will continue to trend downward,” the company said. “Property insurance markets want to achieve growth.”
So long as there is nothing eventful happening in the last month of the year, profitability is expected to motivate carriers to write more new business and expand capacity on existing businesses. More competitors, particularly managing general agents (MGAs) will also help reduce rates.
Liability claims still pose a challenge though, as the growing frequency of large claims continue due to the changing societal, legal and economic landscape. Social inflation, coupled with insurer competition, led to another year of weak underwriting results for US casualty insurers, the company said.
To combat this, insurance buyers have been developing creative insurance programs that balance taking on extra risks while maintaining a strong traditional coverage. Looking ahead to next year, the company said that the need for smart casualty insurance design is “greater than ever.”
“Selecting financially stable, long-term insurance partners will be critical to navigating this evolving landscape,” Polikoff said.
