Trends in Commercial Property Insurance
During the last quarter of 2024 and the first half of 2025, coastal property owners finally saw a welcome shift in the market. After years of turbulence fueled by major losses, inflation, and undervaluation, stability is making a comeback — and it’s showing up in the numbers. In many cases, renewals in early 2025 saw more competition, added capacity, lower rates, and better terms.
What We’re Seeing Locally
Looking ahead to the second half of the year, expectations remain optimistic. Carriers are projected to continue the trend we’ve seen over the past 8 to 10 months, easing off aggressive rate hikes. Renewal rate changes are hovering in a much more manageable range of flat to -5%. Well-maintained, claims-free properties are experiencing the biggest benefits with reductions closer to 10%. Meanwhile, properties with up-to-date valuations are seeing modest inflation-driven limit increases — typically between 5–7%, with some experiencing no adjustments at all.
Carriers’ capacity to offer higher limits, additional coverage and lower deductibles has also improved for some risks. Wind coverage has been easier to secure and for masonry and fire-resistive buildings; we have seen some rate decreases closer to -10%. Roof age continues to be a focal point of the underwriting process, as well as general building conditions and overall maintenance.
Developments to Watch – Natural Disasters
Global insured catastrophe losses hit $50B+ in Q1 2025, following $140B in losses in 2024. Major events included wildfires in Los Angeles and severe storms across the U.S., along with a significant earthquake in Myanmar. The LA fires alone caused over $30B in insured losses. These disasters mark the second-highest Q1 losses on record, continuing a trend of $100B+ annual losses. Despite this, insurance markets have remained well-capitalized with sufficient capacity.
The property insurance market could face both short- and long-term impacts with respect to tariffs, including changes in replacement cost valuations due to rising raw material costs. While the full effect remains uncertain, challenges around capacity, pricing, and coverage are likely to emerge by late 2025. Insureds should closely review their policies to ensure adequate protection.
What You Can Do Today
- Consider budgeting for a roof replacement.
Many carriers continue to limit coverage for roofs older than 15 years, which can affect the loan approval process. It’s advisable to consider replacing aging roofs sooner rather than later. - Analyze your organization’s natural disaster exposures.
If your commercial property is in an area prone to certain types of weather and climate events, implement adequate mitigation and response measures. - Get a new appraisal or refresh the one you have.
Independent rebuild appraisals provide accurate data about older buildings and realistic property values – especially important while the economy continues to struggle with supply issues and inflation in all sectors.
