The commercial insurance market in the third quarter of 2025 displayed mixed conditions across major product lines, according to CAC Group’s latest State of the Market report.
Auto liability rates increased between 5% and 15%. The report attributes these changes to adverse reserve development, higher retentions, and the addition of buffer layers, which placed pressure on carriers. Severity and defense costs continued to rise, while underwriting and coverage terms remained mostly unchanged.
Cyber insurance experienced a softening trend, with rates either flat or down by as much as 10% compared to previous quarters. The market saw ample capacity and more coverage options, which increased competition among carriers. However, ongoing litigation activity and concerns about claims security continued to influence the sector. Market pressure for rate stabilization persisted despite the competitive environment.
Directors and officers (D&O) insurance pricing was stable, with rates flat or declining by up to 5% in both public and private markets. Underwriting and coverage expanded as capacity remained steady.
The report highlighted favorable supply-and-demand dynamics for buyers, but also noted an increase in the severity of derivative settlements. Regulatory scrutiny shifted toward misleading disclosures involving artificial intelligence and crypto-related communications.
General liability pricing rose between 5% and 10%, signaling a hardening market. Social and economic inflation, along with increased litigation and higher settlements, kept upward pressure on outcomes. The report found that results varied significantly by class of business.
Earlier this year, a report from Novatae Risk Group highlighted that commercial insurance rates were still rising, with umbrella and excess liability and commercial auto seeing the largest increases, both at 6.7%.
Other sectors such as manufacturing, contracting, and services also saw notable increases, reflecting a broader trend of rising premiums across various industries.
Property insurance softened, with rates ranging from a 15% decrease to a 5% increase. Underwriting remained stable, supported by ample capacity that allowed carriers to focus on exposure management.
In the first quarter, commercial property insurance premiums rose by 3.6%, and business interruption coverage saw a similar increase. The data also indicated that habitational insurance premiums increased by 4.7%, while public entity premiums rose by 1.7%.
Workers’ compensation remained stable, with pricing between flat and a 5% rise. The frequency of claims declined, but severity increased, driven by medical inflation and higher reserves. Programs such as nurse triage and return-to-work initiatives continued to help manage costs.
Umbrella and excess liability coverage saw the largest rate increases, climbing 10% to 20%. Capacity was constrained and underwriting terms became more restrictive. The report cited nuclear verdicts, litigation funding, and closer scrutiny of attachment points and hazards as factors behind the hardening market.
Some states introduced tort reform measures, but excess capacity continued to expand relative to umbrella layers.
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