Global Commercial Insurance Rates Decline 3% in Q1 2025 Amid Casualty Rate Increase

Global commercial insurance rates experienced a 3% average decline in the first quarter of 2025, continuing a trend of decreasing premiums following a prolonged seven-year period of rising prices. This marks the third consecutive quarter of rate reductions, with Q4 2024 seeing a 2% decrease. The trend reflects a shifting market landscape, influenced by both competitive insurer behavior and regional variations in rate changes.

While most commercial lines saw softening rates, casualty insurance rates diverged by increasing 4% globally, maintaining the same level as in Q4 2024. The U.S. market heavily influenced this rise, with casualty rates increasing by 8%, driven in part by severe claims and substantial jury verdicts, known as "nuclear verdicts." These factors have led underwriters to tighten available capacity and reduce line sizes, impacting coverage and pricing beyond U.S. borders.

In contrast, non-casualty lines such as property, financial, professional, and cyber insurance saw moderating rate trends due to heightened competition among insurers, including new market entrants. This competitive environment has encouraged providers to seek new business and expand their product offerings. The Global Insurance Market Index has tracked these moderating rates since Q1 2021.

Regionally, the rate decreases varied, with the Pacific region experiencing the most significant drop at 8%, followed by the UK at 6%, and India, Middle East, and Africa (IMEA) at 4%. Other regions like Asia and Canada reported a 3% decrease, Latin America and the Caribbean (LAC) 2%, and both the U.S. and Europe saw 1% declines year-over-year.

Market analysts expect continued softening of rates driven by ongoing insurer competition, barring unforeseen market disruptions. The competitive conditions have incentivized buyers to negotiate improved terms, enhance coverage options, and explore alternative risk transfer mechanisms including self-insurance and captive insurance arrangements.

Overall, the index underscores an evolving commercial insurance market characterized by shifting rate dynamics across lines and regions. Providers and buyers are adapting strategies amid changing claims severity trends and competitive pressures, influencing rate levels and capacity availability globally.