'Ample capacity' drives competitive property market: USI midyear outlook

Some casualty rate increases ‘less severe’ with moderate competition

By Erin Ayers, Front Page News

Capacity and competition in the U.S. property market means well-prepared insurance buyers have the opportunity to expand coverage, buy higher limits, reduce their deductibles, and see lower prices, according to USI’s 2025 P/C Mid-year Market Outlook.

“Capital continues to flow into the insurance and reinsurance markets, providing the environment for additional softening,” said USI in its outlook.

The broker highlighted more than $50 billion in insured natural catastrophe losses that stemmed from the Los Angeles wildfires and heavy storm activity as a warning sign for a high-loss year.

“Despite this and an active hurricane season expected, the insurance and reinsurance markets are well capitalized, and ample capacity remains,” said USI.

For non-catastrophe exposed property, the broker cited a range of flat renewals down to 10% decreases. Catastrophe-exposed property with minimal losses could see flat to 20% decreases, while CAT-prone properties with losses may see a range of 10% decreases up to 10% increases.

“Single carrier programs started to see rate decreases, while shared and layered programs saw fierce competition, especially for high-quality risk profiles, resulting in rate decreases of 5% to 30%,” said USI.

However, the broker also warned that “challenging” risks like wildfire-exposed programs, older wood-frame habitational risks, and wind-exposed buildings with older roofs may not be able to achieve price decreases or better terms.

‘Less severe’ increases

For casualty, USI advised insureds to keep an eye on a few trends for the second half of 2025, including a few bright spots in commercial auto, the potential for leveling-off of workers compensation, and tort reform in several states.

“Although rate increases still prevail for the majority, more insureds are obtaining less severe rate increases and flat renewals in industry segments that have achieved rate adequacy,” said USI. “Sufficient capacity exists, and moderate competition for new business has returned to general liability/products for a growing number of sectors, including retail and certain segments of manufacturing.”

In commercial auto, a long-term industry challenge, smaller fleets of fewer than 200 vehicles with good loss history have actually seen a stabilizing market with flat rates or slight increases of 5%. The driver shortage has even lessened to some degree, USI added.

“This issue, once the No. 1 concern for companies, has dropped to No. 9, according to the American Transportation Research Institute,” said USI, adding that insurance cost and availability ranked as the No. 4 issue in the ATRI survey, after not ranking in the top 10 the previous year.

Tort reform efforts in Texas and Georgia also have the potential to lower litigation costs, the broker added. However, auto liability pricing for small fleets with poor loss history is likely to range from 15% to 30% increases, while large fleets are seeing between 5% and 10% increases on average. USI projected 40% increases for excess auto buffers.

“Social inflationary pressures are not abating, nor is the practice of litigation financing to generate a revenue stream,” the broker noted.

Product and general liability, with a projected rate change of flat to 10% increases for H2 2025, face a few challenges including the risk for high-profile foodborne illness outbreaks to “lead to substantial changes in the product liability insurance landscape.”

USI also cited real estate and habitational as notably difficult sectors for liability placements.

“The focus on assault and battery exposures contributes to these sectors’ challenges. More markets are seeking to hold insureds accountable for their risk management programs and loss experience by moving away from guaranteed cost and requiring loss-sensitive programs,” said the broker.