Navigating the Challenging Market of 2025
Expert Insights on Insurance Trends
By: Matt Yost, CIC, CRM – Principal & Chief Sales Officer
The commercial insurance landscape is evolving rapidly, influenced by a myriad of factors ranging from natural disasters to technological advancements. As we move through 2025, businesses must navigate a complex environment marked by fluctuating premiums, emerging risks, and shifting market dynamics. This outlook provides a comprehensive analysis of the key trends and predictions for various segments of commercial insurance, including property, general liability, auto, umbrella liability, and executive lines. By understanding these trends, businesses can better prepare and adapt their risk management strategies to ensure adequate coverage and mitigate potential losses.
Commercial Property | 2025 Price Prediction
Market Trends
• NATURAL DISASTERS – Through October 2024, the United States saw 24 weather-related disasters, with losses exceeding $1 billion, according to the National Oceanic and Atmospheric Administration. Overall, in 2024, insured losses from natural disasters were expected to reach $140 billion, most of which came from convective storms and wildfires.
• INSURANCE TO VALUE – A property’s replacement value is often affected by inflation and material prices, which have been volatile in recent years. Although cost inflation has subsided, insurance carriers will continue to focus on valuations to ensure limit adequacy.
• CARRIER REQUIREMENTS – To lower risk profiles, many insurance carriers have been mandating wind and hail deductibles and requiring actual cash value settlements on older roofs.
• REINSURANCE STABILITY – The capacity issues originating during the pandemic have begun to subside, making more capital available to primary insurers and allowing them to take on portions of larger, more complex risks, in turn making it easier for insureds to obtain coverage.
• LITIGATION CONCERNS – Third-party litigation funding (TPLF) is anticipated to be a $30 billion industry by 2028 and is a key factor in social inflation. TPLF is the practice of a third party providing funding to finance a lawsuit in return for a portion of the settlement. This form of funding has increased the cost of litigation, the frequency of suits being filed, and the rise of nuclear verdict settlements — awards that exceed $10 million.
• ACTIVE ASSAILANT EXPOSURE – FBI reports show that there were 229 active shooter events from 2019 to 2023, an increase of 89% over the previous five-year period. In response to this growing risk, businesses are turning to specialized insurance policies designed to cover losses related to active shooter incidents.
• PERFLUOROSULFONIC ACIDS (PFAs) EXPOSURE – Also known as “forever chemicals,” PFAs can be found in textiles, auto parts, household cleaners, food packaging, and more. They have been linked to numerous health issues, and as a result, insurance carriers have begun adding mandatory exclusions to all liability policies.
• NUCLEAR VERDICT CONCERNS – The American Transportation Research Institute has found that trucking verdicts have increased by more than 50% each year for the past decade, with nuclear verdicts in the sector doubling during this time frame.
• FLEET ELECTRIFICATION – Electric vehicles (EVs) continue to gain popularity in the US market, with experts estimating over 4 million in US fleets by 2030. Uncertainties surrounding the use of EV’s include exposure to cyber threats, pedestrian accidents, and battery problems. However, while EV use may initially increase insurance premiums, expectations are that prices will stabilize over the long term.
• DRIVER SHORTAGES – According to the American Trucking Association, due to rising freight demand and an aging workforce, driver shortages could skyrocket to 160,000 by the end of the decade. As a result, companies are lowering their driver applicant standards to fill open.
• REINSURANCE CONSIDERATIONS – Capacity from reinsurers has softened, particularly for mid-market business with premiums between $10,000 and $100,000, as carriers have found this sector more profitable overall. However, severity trends continue to challenge the adequacy of excess rates, which will cause price increases, especially for businesses with large auto fleets or high- hazard products positions. However, drivers with less experience and shorter driving records are more likely to be involved in accidents.
•EMPLOYMENT PRACTICES LIABILITY (EPL) – Overall, pricing in the EPL market remained stable in 2024, largely due to increased competition and healthy growth. Capacity is improving, and the EPL insurance continues to become a staple in most commercial insurance programs.
• DIRECTORS & OFFICERS LIABILITY (D&O) – 2025 is expected to see the trend of abundant capacity, competitive pricing, and declining premiums continue. A significant contributor to past claims has been Environmental, Social, and Governance (ESG) activism, which will continue to pose a threat to the D&O market.
• CYBER LIABILITY – Despite an ever-evolving threat landscape, the cyber market softened in 2024, primarily driven by a capacity surplus and increased competition among insurers. In 2025, insurers will continue to emphasize cybersecurity controls, leveraging advanced risk management assessment tools (e.g., AI-powered data analytics) to predict losses and price policies more accurately, but it should remain a buyer’s market.
WHAT CAN YOU DO?
• Evaluate your commercial property limits and make inflationary adjustments to ensure you are not underinsured. Doing so will reduce the likelihood of experiencing a coinsurance penalty in the event of a claim.
• Develop a documented business continuity plan that will help you remain operational in the event of an incident.
• Review or develop vendor and subcontractor agreements that can insulate you from a business-disrupting lawsuit.
• Implement and update employee handbooks with policies pertaining to discrimination, harassment, medical leave, and general employment expectations.
• Examine your risk management practices relative to your fleet of vehicles and drivers. Implement safety programs concerning safe driving, driver qualification, hands free devices, and a family use policy.
• Talk to a Hummel Business Risk Advisor about other strategies to help mitigate loss
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