What 2025 Trends We're Seeing With Commercial Property Insurance: A Midyear Update

Staying informed about property insurance trends is critical to managing costs and avoiding surprises. The 2025 midyear outlook brings some welcome changes—but also ongoing challenges you’ll want to watch closely.

Here are the most important updates and what they mean for your business.

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📉 Rate Relief Is Here—for Some

After several years of steep rate hikes, average commercial property insurance increases have dropped below 3%—a dramatic shift from the 20% spikes we saw in 2023. This change is being driven by:

• Improved underwriting results
• Expanded reinsurance capacity
• Easing inflation on property values
• More competition among insurers for quality risks

What it means for you: If your property has limited loss history and minimal CAT exposure, you may be in a good position to negotiate better terms. However, not all accounts are treated equally—location, risk mitigation, and valuation accuracy still matter greatly.

🌪️ CAT Events Are Driving Major Losses—and Market Sensitivity

Natural disasters are still the single biggest cost driver in the market. So far in 2025:

• California’s Eaton and Palisades Fires destroyed over 15,000 structures
• Severe storms in May caused damage to 63,000 properties in the Midwest
• The Atlantic hurricane season is expected to be above average, with up to 19 named storms and five major hurricanes

Global insured losses from natural disasters are projected to hit $145 billion by the end of the year.

What it means for you: Even one major event can impact premiums and availability of coverage across the board. If your operations are in CAT-prone regions, now is the time to revisit disaster preparedness and loss control measures.

🏗️ Insurance-to-Value (ITV) Accuracy Is Under the Microscope

Accurate property valuation is more critical than ever. Though inflation has cooled, new tariffs are affecting the cost of materials like steel, aluminum, and lumber—distorting rebuild costs and leading to underinsurance risks.

What it means for you: Insurers are closely reviewing property valuations, and underreporting can lead to coverage gaps—or penalties. Regularly reassessing your replacement costs is essential to ensure full protection in a claim.

🧩 Exploring Alternative Risk Solutions

A growing number of businesses are evaluating nontraditional insurance options:

• Captives, where businesses insure their own risks
• Parametric coverage, with payouts triggered by event intensity
• Structured fronting, where risk is transferred to a reinsurer or captive

What it means for you: If you're facing high premiums or coverage limitations, it may be worth exploring creative structures to better control your risk financing strategy.

🔭 What to Expect for the Rest of 2025

Moderate market conditions are likely to continue through year-end, with expanded flexibility for shared and layered programs. Still, insurers will maintain strict underwriting for high-risk accounts or those with large losses.

What it means for you: This is a good time to get ahead—review your property valuations, reinforce mitigation measures, and document upgrades or improvements to present your risk in the best possible light.

In Summary

While conditions have improved, the market remains sensitive to large-scale events and valuation gaps. Staying proactive and informed helps keep your coverage strong and your premiums stable—even in a changing landscape.

Connect with Concierge Insurance Group if you'd like to review how these trends may affect your upcoming renewals or to explore alternative options.