Commercial Risk 2025

Summary

Ebbing economic conditions, frequent weather events, evolving trade relations, proliferating artificial intelligence (AI) adoption, and shifting social norms – 2024 was defined by an amalgamation of forces and events that shaped the risk and insurance environment for businesses. As 2025 progresses, these variables will continue to evolve and reshape the global risk landscape, creating both challenges and opportunities for your business. From year to year, insurance companies also adapt their strategies in response to exposures, loss patterns, and performance goals, carefully fine tuning how they assess and take on risks.

The commercial property and casualty (P&C) market is multifaceted, and like always, some areas are demonstrating greater stability than others. In response to unprecedented loss trends and disruptive global events, insurers have been diligent in their efforts to bolster their operational strength, adjusting underwriting practices to gain greater confidence in coverage and pricing decisions. For businesses, understanding these dynamics and anticipating their trajectory will be critical to navigate an insurance market in a state of transition.

Insurance market drivers

• Weather events, particularly traditionally unmodeled perils, continue to reshape how insurers assess and take on risk.
• Litigation patterns show no signs of slowing down, with businesses and insurers advocating for significant tort reform.
• Reinsurance market capacity continues to evolve in response to the loss trends shaping the property and casualty market.
• The economic environment continues to evolve in response to key factors, including growth trends, inflation patterns, supply chain issues, interest rates, and job market conditions.
• Political dynamics, domestically and abroad, pose growing risks for insurers, with social unrest becoming more prevalent.
• Considering interest rate cuts and the political environment, insurers are reassessing how they deploy capacity.
• Innovative technologies, like machine learning and artificial intelligence, are reshaping many areas of insurers’ operations, including modeling capabilities, claims processing, and more.
• Alternative risk transfer solutions have grown in popularity due to sustained profitability challenges in the commercial P&C market.
• Industry-specific exposures are one of the greatest factors influencing rates across coverages today.
• Individual states’ regulations impact insurers’ ability to adjust rates and coverage terms and can impact the availability of coverage.
• Proactivity and preparedness are paramount in today’s risk environment, with underwriters pushing organizations to adopt measures that help improve claims resilience and also minimize claims likelihood.

Commercial P&C overview

• Property – A market shifting toward stability in the era of frequent weather events
• General liability – Heightened underwriting scrutiny in the face of dynamic loss drivers
• Commercial auto – Compounding pressures continue driving rates upward
• Workers’ compensation – Strong underwriting performance bolstering capacity and rate environment
• Directors and officers (D&O) liability – Abundant capacity and competitive rates driven by market competition
• Employment practices liability (EPL) – A magnifying glass on heightened claims activity trends
• Fiduciary liability – Favorable rate and capacity environment underpin stable market conditions
• Cyber liability – Market competition bolstering stability, but loss patterns challenge current conditions
• Umbrella liability – Underlying risk characteristics shaping market outcomes
• Excess and surplus (E&S) – Year-over-year growth and sustained market momentum

Containing the cost of risk and insurance is a continuous process, shaped by distinct variables unique to your business. In this report, we share insights and strategies about how you can build a fortified protection strategy to help positively influence your insurance outcomes. And as you traverse the year that lies ahead, The Baldwin Group will continue providing personalized, innovative, and sound recommendations that help you and your business protect the possible.

Introduction

Throughout 2024, businesses and insurers continued to navigate dynamic risks shaped by economic shifts, natural catastrophes, litigation trends, and geopolitics. As 2024 came to a close, rates and capacity for certain segments of the property insurance market began to stabilize, while others remained challenged. Within the casualty market, many areas demonstrated continued deterioration in underwriting results. In response to the increasingly complex variables shaping today’s risk landscape, insurers continue to take a very stringent approach to underwriting, placing a magnifying glass on all areas of insureds’ risk characteristics. And in 2025, the push toward prevention and improving risk quality is set to continue.

If the past years have taught us anything it is that capacity, rates, and terms for coverage are in a constant state of flux, continually reshaping the risk environment for businesses across industries and around the world. In 2025, some segments of the commercial property and casualty (P&C) market are seeing hardened conditions because of continued, unprofitable underwriting results while other lines have bolstered the market’s overall performance. Geography, hazard class, loss history, and risk quality are decisive factors in the availability and pricing of coverage in today’s market.

Insurers will always balance the need to provide critical financial protection with the overarching exposures their companies face globally, weighing how worldwide loss trends impact capacity and pricing decisions. Understanding how key drivers evolve over time lends critical context for businesses working toward improving their risk and insurance outcomes. In this report, we provide a comprehensive analysis of the forces reshaping the trajectory of today’s commercial P&C market and offer recommendations for businesses to address challenges, confidently.

Through the insurance market’s shifts and turns, The Baldwin Group is dedicated to delivering the specialized expertise and strategic insight necessary for our clients to navigate the complexities of evolving market cycles. By fostering meaningful collaboration with both our clients and partners across the insurance sector, we deliver solutions that help empower you to transcend market shifts, harness opportunities, and protect what’s possible for your business.

Dive Deeper

In the full report, we offer in-depth insights into the trends driving the market and offer ways to help transcend market shifts, harness viable opportunities, and protect the possible.

Download the full report