After an extended period of relentless and often unpredictable premium hikes that strained business budgets across the nation, recent data now suggests that the turbulent commercial insurance market may finally be entering a period of much-needed calm. For business owners and risk managers who have navigated years of volatility, the latest industry figures point toward a new equilibrium. A comprehensive survey of commercial lines insurance pricing for the third quarter of 2025 revealed an aggregate rate increase of 3.8%, a figure that, while still an increase, represents a significant and continued moderation of pricing pressure. This trend signals a potential shift from a hard market characterized by steep, widespread price jumps to a more stable and predictable environment, offering a glimmer of relief and an opportunity for strategic reassessment.
A Closer Look at the Numbers
The Deceleration Trend
The stabilization of the commercial insurance market is not a sudden development but the result of a consistent and measurable slowdown in rate increases over the past year. The aggregate price hike of 3.8% reported in the third quarter of 2025 held steady with the figure from the second quarter, indicating a leveling off of pricing adjustments. This stability becomes even more significant when viewed in a broader context. It represents a substantial deceleration from the 5.3% rate increase observed in the first quarter of the year and an even more pronounced cooling compared to the 6.1% price jump recorded in the third quarter of 2024. This clear downward trajectory suggests that insurers are moving away from the aggressive, across-the-board rate hikes that defined the market in previous years. For businesses, this trend translates into greater predictability in budgeting and financial planning, a welcome change from the volatile conditions that previously made forecasting insurance costs a significant challenge. The sustained nature of this moderation points to a market that is finding its footing, balancing profitability with market competition.
Account Size Matters
The overarching trend of stabilization was not monolithic; its impact varied depending on the size of the insured entity, revealing distinct experiences across different market segments. The data indicates that small and mid-market accounts generally experienced more modest rate increases compared to their larger counterparts. This suggests that competitive pressures may be more acute in these segments, with insurers vying for a larger share of this broad and diverse portion of the market. Meanwhile, large accounts, which often have complex risk profiles and have borne the brunt of significant rate hikes in recent years, also saw a noteworthy deceleration in price growth. The slowing pace of increases for these larger organizations signals a potential shift in underwriting appetite and a recognition that the substantial pricing corrections of the past may have reached a point of sustainability. This segmentation is crucial for understanding the market’s dynamics, as it shows that the path to stability is being paved differently for businesses of varying scales, allowing for more tailored risk management and insurance purchasing strategies.
Divergent Paths in Coverage Lines
The Outliers and High-Flyers
Despite the widespread trend toward moderation, certain lines of coverage continue to defy the pattern, presenting persistent challenges for policyholders. Commercial auto insurance remains the most significant outlier, maintaining its long-standing trajectory of double-digit price growth. This troubling consistency is fueled by a combination of factors, including escalating vehicle repair costs, persistent social inflation driving up litigation awards, and a high frequency of claims. Insurers in this line face ongoing profitability struggles, necessitating continued, aggressive rate adjustments. Similarly, excess and umbrella liability recorded the highest rate of price increases among all surveyed lines. These policies, which provide coverage above the limits of primary insurance, are particularly sensitive to large-scale losses and litigation trends. However, even within this challenging segment, there are signs of easing. The survey noted that while the increases remain substantial, the pace of these hikes has begun to moderate, suggesting that even the most volatile corners of the market are beginning to feel the broader stabilizing influence.
Areas of Relief for Policyholders
In stark contrast to the pressures seen in commercial auto and umbrella liability, several key insurance lines provided welcome news for businesses by registering outright price decreases. This development marks a significant turning point, offering tangible cost relief in areas that were previously sources of major concern. Workers’ compensation continued its trend of favorable pricing, with rates declining as a result of improved workplace safety measures and lower claim frequencies. More surprisingly, directors’ and officers’ liability (D&O) and cyber insurance also saw price reductions. Both of these lines had experienced astronomical rate hikes in recent years due to heightened risks from shareholder litigation and rampant cyberattacks. The current downturn in pricing suggests that the market may have corrected, with increased capacity, more sophisticated underwriting, and improved risk controls by policyholders contributing to a more competitive environment. Additionally, commercial property insurance experienced a price decrease, a positive development for businesses that have faced escalating costs due to severe weather events and rising reconstruction values.
Navigating the New Normal
The third quarter of 2025 ultimately revealed a commercial insurance market in a state of complex transition rather than a simple return to a soft cycle. The data painted a picture of a landscape that had stabilized in the aggregate but remained highly segmented, with distinct performance across different coverage lines and account sizes. This nuanced environment demanded a more strategic and informed approach from businesses. The key takeaway was not one of universal relief but of targeted opportunity. Policyholders were positioned to proactively engage with their brokers to seek more favorable terms in areas like D&O and cyber, where competition had returned. Conversely, in persistently difficult lines such as commercial auto, the focus shifted from price negotiation to a deeper investment in risk management and loss control to mitigate the impact of unavoidable rate increases. The market’s evolution underscored the importance of a dynamic, portfolio-based approach to insurance purchasing, one that acknowledged both the emerging pockets of relief and the enduring areas of challenge.
