Commercial insurance buyers are seeing a better pricing environment and broader terms and conditions as they head into 2025, senior executives at brokerage Risk Strategies Co. said.
While average rates are stable, there is significant variation between different lines, with directors and officers liability and cyber liability rates falling, but some auto liability buyers continue to see sharp increases, they said.
"In the aggregate, it seems to be getting better from a client perspective," said John Mina, CEO of Risk Strategies, in an interview discussing the Boston-based brokerage's most recent "State of the Insurance Market" report, released earlier this month.
More insurers are entering or re-entering previously difficult sectors, providing more options for buyers, and insurers are more open to discussing expanded coverage, he said.
"Rates are at a level right now, after a number of years of the hard market, that are becoming attractive," to insurers, said Mark Manzi, national brokerage leader at Risk Strategies.
In addition, as the market stabilizes, insurers are more open to removing some policy sublimits and offering multiyear deals, he said.
Among the main coverage lines, the property insurance market stabilized in 2024 after two years of profitability for insurers and an improved reinsurance market, the brokerage's report said.
Risks with limited catastrophe exposures and few losses should expect rates to range from 5% down to 5% up in 2025, the report said. But risks exposed to catastrophe losses or have poor loss records will see increases of 15% or more.
Most casualty rates continue to increase, but competition for new business is strong, the report said. Policyholders should expect substantial rate increases for auto liability and umbrella coverage, but general liability rate increases are slowing, and workers compensation remains flat.
In 2025, umbrella rates will likely increase between 5% and 35%, auto rates will likely rise between 5% and 25%, general liability will be up 4% to 10%, and workers comp flat to up 5%, the report said.
The management liability market remains soft, although some higher-risk companies are seeing rate increases, the report said. Class action lawsuits rose in 2024 for companies in the financial, real estate, communications, health care, telecommunication and technology sectors.
Private companies should expect 5% to 15% decreases for primary management liability coverage, including D&O, and 10% to 30% decreases for excess cover. Public companies should see 10% decreases to flat for primary and 10% to 30% decreases for excess, the report said.
Cyber liability rates are also expected to fall, and companies with the most sophisticated security controls are seeing the most significant rate cuts. Companies with good controls should see 5% to 10% reductions, and companies with layered cyber controls should see 20% cuts, the report said.
Cyber liability remains an emerging coverage with many companies, particularly smaller entities, not buying coverage, Mr. Mina said.
"Our data suggests that as much as 60% of clients, and I'm using a broad spectrum of all sizes, are still not buying cyber," he said.