Last week, CIAB’s Q2 2025 commercial lines pricing survey showed an average premium increase of 3.7%, down 0.5pts from Q1 2025 and down 1.5pts year-over-year. These results are the latest in a trend of softening rates in the commercial lines market, the implications of which we have previously discussed at length.
The chart below shows these changes by quarter since 2000.
The latest CIAB survey confirmed what we had heard on the latest earnings conference calls and have argued in recent notes. Our analysis of the Q2 data yielded several key takeaways.
Broadly, the industry is past the inflection point, and the orderly slowdown in commercial lines pricing continues. In this new phase of the market cycle, pricing headwinds stand to weigh on returns and, by extension, valuations as investors seek to re-evaluate the sector ahead of a decline in earnings expectations.
The buckets of rate change show that an overwhelming majority of respondents across commercial auto, umbrella, and general liability continued to report rate increases of varying degrees. Crucially though, the reported rate increases for commercial auto and general liability are smaller when compared to Q1 2025.
This was driven by increased competition for large account business, which partially offset the social inflation pressures we previously highlighted in our Q1 analysis.
Rate increases in umbrella were reportedly higher, reflective of ongoing social inflation pressures and, in particular, the increasing severity of nuclear verdicts. This underscores the complexity of the rating environment in casualty lines.
Commercial property rate increases in Q2 2025 were lower sequentially as well, with fewer respondents reporting rate increases relative to Q1 2025. The picture here is more disorderly, with mid-market commercial property lines still attracting modest rate increases as cat-exposed and E&S property lines seeing ongoing declines.
Workers' compensation rate decreases slowed versus Q1 2025, which may mark a shift in trends. However, we maintain our concerns surrounding the longevity of this line as a means of offsetting other liability reserve charges.
We expand upon these points in the analysis below.
Commercial auto increases have moderated despite ongoing struggles with profitability
The chart below shows the responses to the CIAB survey on commercial auto, separated into eleven categories by reported pricing change.
Roughly 92% of respondents reported some degree of rate increase, unchanged from Q1. What has changed since our last analysis is that these rate increases are smaller, with more than half indicating rate increases of less than 10% and none reporting increases above 30%.
Commercial auto has been a troubled line of business over the past 14 years, with industry combined ratios above 100% for most of that period. Last year was no exception, with the industry’s commercial auto combined ratio coming in at 107%.
The line has been hit particularly hard by the impact of social inflation in recent years. In spite of consistent and sometimes dramatic rate increases, carriers have been unable to get ahead of this worsening loss-cost environment, especially as ongoing driver shortages and rising fleet maintenance costs only make matters worse.
Umbrella shows increased stress as nuclear verdicts rise
Rate changes for umbrella in Q2 2025 were similar to those reported last quarter. However, more respondents reported higher rate increases in this past quarter versus Q1 2025. This is evidenced by the 11pt increase in the number of respondents reporting rate increases upwards of 20%, or the dark grey bar shown below.
Social inflation has also heavily impacted umbrella insurance, which provides insureds with coverage beyond their primary policies’ limits. Notably, social inflation has driven up the severity of nuclear verdicts. This results in outsized awards, driving similarly outsized losses for insurers, which ultimately attach to these covers more frequently.
As such, the situation seems unlikely to improve in the near term, despite industry efforts in lobbying for tort reform. We expect strong rate increases for umbrella to continue as the industry grapples with a worsening loss-cost environment driven by social inflation pressures.
General liability continues to receive moderate rate increases
While most respondents continued to report rate increases for general liability, the percentage of respondents reporting no rate change increased roughly 11pts versus Q1, reflective of the previously discussed moderation in rate increases driven in part by increased competition for large accounts.
We have repeatedly called attention to poor results and adverse reserve development in other liability, the largest component line of general liability. Reserve charges in the line have been partially offset by huge reserve releases from workers’ compensation, which we have noted is a practice that will not be sustainable forever.
As loss costs continue to rise, higher general liability rates will be necessary for insurers to deliver profitability in what is one of the largest commercial lines of business. In 2024, the combined ratio for general liability ticked up 3pts to 106%, as compared to 103% in 2023, reflective of the worsening loss-cost environment.
Rate declines for workers’ comp have slowed
More respondents have indicated no change to workers’ comp rates and less have reported rate declines between 1-9%. This has coincided with a slight uptick in single-digit rate increases, with 8% of respondents reporting increases between 1-9%.
Workers’ comp has been one of the most profitable lines of business in the industry for a number of years now and, as previously mentioned, has been used as a source of reserve releases for a number of carriers. Accordingly, rates have been on the decline for several years now, though not to the degree seen in the mid-to-late 2000s.
The increase in respondents reporting unchanged or even positive rate changes is an indication that insurers’ view on the line is shifting.
The upscaling of insurers’ workers’ comp books in the early 2010s has clearly paid dividends in the form of extensive reserve releases, but we do not expect more recent accident years to be nearly as profitable.
This isn’t to say that the line won’t continue to be successful, but it could indicate that future accident years will have fewer over-reserved workers’ comp buckets to draw from.
Commercial property rates are increasingly uneven
Nearly all respondents were reporting some degree of rate increases for commercial property as recently as Q2 2024, and a majority of respondents still do. However, a growing minority of respondents – now 36% – reported a rate decrease of 1-9% in Q2 2025, with about 6% of respondents reporting “no change” in between the two groups.
The two groupings are evidence of a divergence between mid-market commercial property lines which still attract rate increases, and a decline in rate for large account cat-exposed and E&S property lines.
In summary, the latest CIAB survey results reaffirm our view that the industry has passed the inflection point on pricing, and ongoing pricing headwinds are likely to weigh on results and valuations.
Rate increases in commercial auto and general liability moderated as competition for larger accounts intensified, whereas umbrella rate increases accelerated as the severity of nuclear verdicts continued to rise.
Commercial property rates slowed overall, though results have diverged among different segments. Workers’ comp rate decreases slowed and may signal a coming shift in the trendline.