Commercial Insurance Stabilizes with Strong Capital and AI; Property Rates Ease

Commercial insurance steadies as capital and AI reset pricing dynamics

The commercial insurance market is moving back into balance. Willis' latest Insurance Marketplace Realities report cites stronger capital positions, broader competition, and smarter use of data as the drivers of a more disciplined, buyer-friendly environment.

Industry surplus now tops $1 trillion, with global reinsurance capacity above $725 billion. That depth is restoring competition across multiple lines and improving terms after years of constraints and rate pressure.

Where pricing is heading

Property is easing. Renewal rates fell 5.5% in Q1 2025 and 8% in Q2 2025. Markets are adding capacity and expanding terms, though quality data, credible valuations, and risk mitigation still determine who gets the best outcomes.

Workers' compensation remains a standout. A $16 billion reserve surplus is supporting rate stability and attractive terms. Carriers are competing for well-performing accounts.

Excess casualty is still firm. Concerns over social inflation, large verdicts, and higher loss frequency continue to push rates up. Underwriters remain selective and focused on attachment points, venue, and loss control rigor.

AI is pushing pricing to account-level performance

Carriers are embedding AI into underwriting, claims, and risk modeling. The payoff: sharper exposure evaluation, faster claims decisions, and clearer pricing logic tied to an account's actual controls, loss history, and data quality.

For buyers, this means renewal outcomes are increasingly earned with evidence. Clean SOVs and COPE data, updated valuations, engineering reports, and control documentation matter more than broad market cycles.

Capacity and opportunity-plus the risk overhang

With competition returning, fresh capital could flow into reinsurance and specialty lines like cyber, environmental liability, and supply chain risk. That supports new capacity and product innovation.

Risk hasn't gone away. Insured catastrophe losses have exceeded $100 billion annually for five straight years, and systemic exposures-from cyber events to climate-driven disruptions-remain live issues. See context from Aon's catastrophe insights here.

What to do now: practical moves for insurance buyers

• Benchmark with data. Use analytics to compare rates, terms, and retentions against peers and recent market prints. Quantify where you deserve improvement.
• Prioritize property remarketing. Test limits, deductibles, and endorsements while conditions are favorable. Bring updated valuations and mitigation evidence to the table.
• Lock in workers' compensation value. Seek multi-year rate commitments and consider higher retentions where loss performance supports it.
• Start excess casualty early. Share loss control detail, consider layering/attachments strategically, and be open to alternative structures to access capacity.
• Upgrade data hygiene. Clean SOVs, credible COPE, cyber hygiene evidence, and timely loss runs are now pricing levers.
• Build AI literacy across the team. Streamline submissions, enrich risk narratives, and speed claims reporting with AI-enabled workflows. For structured training, see Complete AI Training.
• Secure favorable wording and duration. Where possible, negotiate multi-year agreements with clarity on valuations, sublimits, and critical endorsements.

Bottom line

Leverage has shifted to buyers, especially in property and comp. Use this window to improve pricing, terms, and structure-then bank the gains with durable agreements before the next tightening cycle arrives.