Buoyed in part by stable conditions in the reinsurance marketplace, commercial property insurers continue to defend existing business and aggressively compete for new business. Buyers are seeing expanded capacity and more favorable terms and conditions. As insureds become comfortable with reporting building and contents values at modest inflation factors, carriers have generally placed less emphasis on this as compared to the last 24 months.

During the hard market cycle of 2018 through 2023, rates for single-carrier placements rose, but not as sharply as those for shared and layered programs, which are now seeing more significant rate relief. But insureds must weigh emerging market opportunities against the value of long-term carrier relationships, especially amid frequent oversubscription by insurers. Insurers are aggressively competing for and offering particularly favorable rates and terms to middle-market buyers.

With reinsurers generally satisfied with attachment points and pricing following adjustments, conditions continue to favor property insurers. Although the Southern California wildfires generated notable insured losses — an estimated $38 billion, according to Fitch Ratings — these are expected to impact personal lines more than commercial property.

Still, insurers and reinsurers remain concerned about the broader landscape of natural catastrophe losses. Swiss Re estimates that losses totaled $137 billion in 2024, with convective storms, flooding, and other “secondary” perils accounting for three-fifths of that total.

As the market softens, many buyers that had turned to parametric insurance products because they previously were less expensive than competing property policies are now increasingly purchasing traditional coverage. Other buyers that chose parametric coverage in recent years because of its speedy claims resolutions and flexible terms and conditions continue to purchase such policies; in some cases, they are increasing limits.

Insurers will be closely monitoring the 2025 hurricane season, which NOAA forecasts will see above-normal activity. Carriers are also watching inflation trends as rising costs could once again drive up the cost of raw materials that are essential to rebuilding efforts post-claim. Potential losses from the June Los Angeles protests could also complicate the property outlook for the remainder of the year.