Capacity remains ample and market conditions in the property sector remain competitive, despite record cat losses in Q1 and an active hurricane season expected ahead, according to USI’s midyear P&C outlook.
Catastrophe losses for the quarter were the second highest on record, exceeding $50bn. This was largely due to the Los Angeles wildfires in January, with severe convective storms across the US in March and a 7.7 magnitude earthquake in Myanmar adding to the costs.
The report noted that 2025 is on track to be the sixth consecutive year of global cat losses exceeding $100bn, adding that the insurance market seems to be “facing a new normal”.
Reinsurance markets have ample capacity, and treaty renewals in January were favorable, though April renewals started to see wider swings on rate changes due to portfolio loss activity.
Property renewals saw increased competition, with single-carrier programs starting to see rate decreases in the first half of the year. Shared and layered programs were even more competitive, especially for high-quality risk profiles, resulting in rate decreases of 5% to 30%, according to the report.
Some risks remain challenging to place, due to limited insurer appetite, and may not experience the decreased rates or improved terms seen in the broader market. These include wildfire-exposed accounts, older wood-frame habitational risks, wind-exposed locations with older roof coverings, food manufacturing and subsidized housing.
USI projects that the second half of the year will see opportunities for insureds to expand coverage, purchase higher limits, reduce deductibles, improve terms and reduce premium due to continued capital flow into the insurance and reinsurance markets.
Casualty
In the casualty sector, workers’ compensation remained mostly profitable for the first half of 2025, but carriers had lowered profit margins due to several contributing factors, including a decline in reserve redundancy, according to USI.
Commercial automobile, general/products and umbrella/excess liability lines capacity remains adequate, and rate increases are generally stabilizing for insureds, as was projected by USI’s January 2025 P&C market outlook.
Environmental
There was increased competition in environmental lines in the first half of 2025, particularly in contractor pollution liability, according to USI.
The market also saw a significant expansion in integrated casualty products, which combine CPL or pollution legal liability with general liability policies.
Excess limit capacity per insurer has decreased since January. Where some carriers previously offered up to $25mn, limits have generally been reduced to $5mn to $10mn, according to USI.
Additionally, insurers are increasingly mandating coverage exclusions for per- and polyfluoroalkyl substances (PFAS) claims. This trend is particularly pronounced in general liability and product liability policies.
The environmental sector is expected to grow 10% by the end of the year due to increased demand. Greater environmental risk awareness, increased litigation and stricter regulations are driving factors, according to the report.
D&O
Public D&O premiums were mostly flat in the first half of the year. Private and not-for-profit organizations may still see slight premium reductions, according to USI.
Insurers are offering expanded coverage – such as regulatory investigation costs and carve backs to certain exclusions – to keep premiums from decreasing.
Trends to look out for include the impact tariffs may have on companies’ financial performance, forecasting abilities and market stability.