Property insurance rates keep falling during midyear renewals

Commercial property insurance rates continued their downward trend during midyear renewals as a surge in market capacity and intensified competition provided significant relief for buyers. This shift allows policyholders to secure additional coverage limits and improved policy terms, marking a transition into a buyer’s market for the property sector. Barring a catastrophic hurricane season, brokers expect this pricing relief to persist through the end of the year, driven by insurers' efforts to retain and expand their business portfolios.

The property insurance market is experiencing accelerated rate declines, with Aon reporting an average 15% reduction across its property book in the first quarter, representing the eighth consecutive quarter of decreases. This trend is fueled by global insured catastrophe losses totaling approximately $35 billion in the first half of the year—falling below the inflation-adjusted five-year average—and a lowered Atlantic hurricane forecast from Colorado State University. Gregory Mann of Marsh Risk noted that competition is intensifying as new managing general agents and broker-backed facilities enter the market, leading to rate reductions for shared and layered accounts that are roughly double those seen in single-insurer placements.

Beyond simple price reductions, buyers are increasingly prioritizing improvements in policy terms and conditions, such as lowering retentions and increasing catastrophe sublimits. Vincent Flood of Aon highlighted that insurers are often willing to grant concessions on deductibles and limits to maintain premium volume, sometimes offering more value through reduced retentions than through a 15% rate cut. Martha Bane of Arthur J. Gallagher & Co. observed greater flexibility regarding percentage windstorm deductibles in certain Tier 1 zones, noting that while 5% deductibles remain standard in areas like Miami-Dade, insurers are more open to negotiations in inland Florida and parts of Texas.

The competitive environment has led to dramatic price drops for some high-exposure accounts, with Jeff Buyze of USI Insurance Services reporting rate decreases exceeding 40% on certain large catastrophe-exposed shared and layered deals. For instance, a major hospitality account secured a 31% rate reduction due to the influx of capacity from both new entrants and incumbent insurers. As the market softens, industry experts advise buyers to reclaim coverage features lost during the previous hard market, such as broader coverage extensions and fewer policy non-concurrencies, while balancing long-term insurer relationships against aggressive offers from new market participants.