The Baldwin Group, an insurance brokerage and advisory firm, has released its Q2 2025 Market Pulse Report, providing a clear view into a commercial insurance market that is becoming increasingly divided.
According to the report, stability and renewed competition are returning to commercial property insurance, while casualty lines—particularly those influenced by legal risk—remain under significant pressure.
Property markets have started to settle after several years of disruption. This shift is largely due to more favourable reinsurance conditions, expanded capacity from Managing General Agencies (MGAs) and the Excess and Surplus (E&S) market, and broader use of real-time data to assess risk.
Meanwhile, casualty lines such as general liability, commercial auto, and excess liability continue to struggle, with loss cost volatility increasing as litigation risk grows.
“The winners in today’s market aren’t just reacting—they’re out manoeuvring,” commented Matt Kashdin, National Director of Client Engagement, The Baldwin Group.
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“Every year brings the potential for major catastrophe (CAT) risks, which can impact pricing trends. Businesses can unlock better terms, broader coverage, and strategic advantage by working with risk and insurance advisors who understand where the market is bending, not just where it’s been.”
Year-over-year, commercial property pricing has dropped significantly, moving from an 8.3% increase in Q2 2024 to flat pricing in Q2 2025.
This trend is supported by the July 1 reinsurance renewals, which brought ample capacity. Risks that are clearly defined and well-managed are benefiting the most, especially as MGAs increase their participation and E&S placements grow. Even larger accounts exposed to CAT risks, which had faced sharp rate hikes in recent years, are now seeing notable decreases in risk-adjusted premiums.
The market also demonstrated resilience in the face of a major test early in the year. The Los Angeles wildfires in January led to $45 billion in insured losses, placing significant stress on catastrophe budgets.
Despite this, the market remained steady. Reinsurance renewals for excess of loss coverage (XoL) continued on favourable terms, maintaining stability across key property segments.
Companies that have invested in flood barriers, upgraded roofing systems, sensor technology, and current property valuations are seeing clear benefits. These risk management strategies are leading to better pricing, more available capacity, and stronger coverage options.
On the casualty side, insurers are confronting growing challenges. General liability and commercial auto lines have seen continued pricing increases, with average hikes of 5.3% and 6.5% respectively.
This is being driven by what carriers describe as systemic issues in the legal environment—large jury verdicts, legal system abuse, and the expanding role of third-party litigation funding. Pricing for umbrella and excess liability coverage also remains high, with average increases of 9.3%.
Insurers are growing more vocal about the need for reform, arguing that current legal conditions amount to a hidden cost for policyholders and the wider economy. Many are dealing with the impact of increasingly frequent and severe jury awards, often labeled “nuclear verdicts,” which create unpredictability in claims outcomes and underwriting.
The report also notes developments in cyber insurance, where rising ransomware threats and supply chain vulnerabilities are pushing insurers toward more preventative coverage models. While underwriting standards are tightening, capacity remains ample and pricing competitive.
In management liability, the Directors & Officers (D&O) and Employment Practices Liability (EPLI) markets continue to offer favourable pricing to well-governed, financially strong businesses, although underwriters are becoming more selective amid ongoing economic and regulatory challenges.
Kashdin further added: “With continued increases in the severity of CAT events forecasted and litigation trends showing no sign of retreat, nimbleness and responsiveness will define success.
“Organisations that adopt forward-looking resilience strategies and partner collaboratively with risk and insurance advisors who can help provide guidance and strategies will be best positioned to leverage optimal programme structures and pricing at renewal.”
With hurricane season underway and further legal and economic pressures looming, The Baldwin Group encourages businesses to take immediate steps to reinforce their risk posture. Reviewing policy limits, refining programme structures, and maintaining accurate, data-driven risk profiles have become essential practices for navigating today’s complex insurance environment.
As outlined in The Baldwin Group’s 2025 Mid-Year State of the Market report, companies that embrace proactive risk strategies, current valuations, and real-time monitoring technologies are consistently earning better terms, broader coverage, and greater confidence from underwriters.
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