Premium increases across commercial insurance policies are slowing, according to the latest market survey by The Council of Insurance Agents & Brokers. In the first quarter of 2025, average premium hikes dropped to 4.2%, compared to 5.4% in the last quarter of 2024.
This marks the 30th straight quarter of premium growth, but the pace is clearly easing. Medium-sized accounts saw the most notable change, with average increases falling to 3.6%—a sharp 42% drop from 6.4% in the previous quarter. Industry experts point to rising competition among insurers and more flexible underwriting as key reasons for the shift. One professional from a large Northwestern firm said insurers have “begun to re-engage with the middle market.”
Large accounts experienced a slowdown too, with average increases declining from 6.3% to 5.3%. Small account premiums held steady at around 3.6%.
Not all lines of insurance moved in the same direction. While most saw smaller increases, commercial auto and umbrella policies stood out with the highest hikes—10.4% and 9.5%, respectively.
Some types of coverage even saw premium drops. Workers compensation premiums fell by an average of 2.6%, followed by cyber insurance at 2.1%, and directors and officers liability (D&O) at 1.6%. Employment practices and terrorism coverage saw modest decreases of around 0.4%.
The decrease in D&O premiums is linked to stronger market competition and higher underwriting capacity, as supported by several early 2025 industry reports.
A key factor shaping the market is the growing impact of third-party litigation funding (TPLF). Many industry respondents said TPLF is influencing claims, premium pricing, policy terms, and coverage limits. Commercial auto and umbrella insurance have been particularly affected, contributing to the steep price increases in those lines.
Underwriters are responding by lowering coverage limits and excluding certain risks. A respondent from a major Southwestern firm stated that “third-party litigation funding is hurting the consumer,” highlighting concerns about its market-wide effects.
Overall, the commercial insurance market is adjusting to increased competition, more flexible underwriting, and new legal trends. While premiums are still rising, the slower growth and falling rates in several key lines suggest the market may be stabilizing after years of steady increases.
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