The US commercial property insurance market has shifted into a softening phase, reversing nearly a decade of hardened rates. Premiums are declining, signalling relief for insureds who have weathered years of rising costs and stricter underwriting.
While this trend is beneficial to clients, brokers must be attuned to carriers that are refining their underwriting strategies and applying greater scrutiny to certain risks, one commercial property specialist told Insurance Business.
Henry Daar (pictured), head of US property claims at Willis, weighed in on the current market environment and the ongoing influence of catastrophic weather events on the sector’s trajectory.
“When premiums go down, so does revenue for both insurers and brokers, since commissions are tied to premium size,” Daar said. “Insurers have adapted to the unpredictability by protecting themselves through higher deductibles and adjusted rates.”
Even amid softening rates, carriers are tightening their standards, particularly for older properties and industrial buildings. Daar noted a specific focus on roof conditions at manufacturing facilities.
“If a roof is 15-plus years old, an insurer may only cover it for actual cash value… that’s a huge financial difference,” he said. “A 17-year-old roof increases the risk of costly internal damage during storms. Encouraging replacements helps both the insurer and the insured avoid bigger problems down the line.”
Daar also noted the market has “moved away from fixed‑dollar deductibles for hurricanes and toward percentage‑based deductibles,” especially in high-risk coastal areas.
“For instance, a 5% deductible on a $50 million building is a $2.5 million deductible, far more significant than the flat amounts we saw pre‑2005,” he said. This change helps carriers insulate themselves from massive first-dollar losses during catastrophic events while encouraging insureds to invest more in pre-loss mitigation and risk management.
The National Oceanic and Atmospheric Administration (NOAA) reported a 60% chance this year’s storm activity will surpass the seasonal average. The agency has projected between 13 and 19 named storms (sustained winds of at least 39 mph). Of those, NOAA projected six to 10 could strengthen into hurricanes, and up to five may reach major hurricane intensity.
Daar, who has around 45 years’ experience in property insurance, said projections don't always influence real-world outcomes.
“2017 was predicted to be a light hurricane season, yet we had Harvey, Irma, and Maria,” he pointed out. “You might as well flip a coin.
“The real impact depends on where storms make landfall. For example, hurricanes hitting less populated areas might do damage, but not on a commercially significant scale. Meanwhile, (Hurricane) Ian, which tore through Naples, Fort Myers, and up into Tampa, caused major losses.”
However, Daar warned the property insurance market’s outlook could reverse rapidly in the event of a major catastrophe. “If we get hit with a bad hurricane season in the wrong areas, we could see $100–$200 billion in losses, which would certainly change pricing dynamics,” he said.
Beyond hurricanes, wildfires have also spurred insurers to rethink coverage zones and demand stronger loss control measures, particularly in the aftermath of destructive blazes in California at the start of the year.
“Areas like Pacific Palisades, with homes worth $40–60 million, saw significant impacts. While technically these were personal lines policies, the financial hit to carriers was substantial,” Daar said.
“In response, many insurers are requiring proactive risk mitigation: private fire protection services, brush clearing, removing trees near structures, and more. Some even have dedicated fire mitigation contractors who respond directly to protect these high-value properties during wildfires. So, carriers are definitely getting more involved in loss prevention.”
With hurricane season underway, Daar stressed the importance of accurate property valuations. In today’s inflationary environment, he said, underreporting replacement costs can lead to major coverage disputes at the time of loss.
The Willis leader also emphasized operational readiness. “The best-run operations are buttoned up well before landfall,” Daar said. “Rigs shut down, employees evacuated, assets protected. If the storm shifts course, you may have lost a day or two of business, but you’ve done everything possible to minimize risk.”
