Insurance rates drop (again)

Commercial insurance rates declined slightly in Q3, continuing a yearslong trend that experts say should continue into the foreseeable future. That’s good news for CFOs looking to keep insurance costs low.

According to insurance broker Marsh, US commercial insurance rates on average declined 1%, after coming flat in Q2 and decreasing by 1% in Q1. Globally, commercial rates dropped by 4%.

The US composite insurance rate drop would have been greater if not for an 8% quarterly rate increase in casualty insurance, which covers losses from other unexpected incidents like car accidents, theft, or workplace injuries. Commercial property insurance rates fell 9%, rates for financial and professional lines (think: directors and officers liability) declined 2%, and cyber insurance rates fell 3%.

Marsh noted in a news release that Q3’s global insurance rate drop continues a trend of pricing moderation that dates back to the start of 2021. Organizations are seeing both lower rates and more opportunities for better terms and coverage in the current market, according to John Donnelly, president of global placement at Marsh.

“Barring unforeseen changes in conditions, we expect these trends to continue,” Donnelly said in the release.

John Doyle, CEO of parent company Marsh McLennan, echoed that sentiment. Unless there are “significant changes in large loss activity as well as the broader macro environment, we anticipate insurance and reinsurance market conditions seen so far this year will likely continue in 2026,” Doyle said during a recent earnings call.

There’s potential downside to all this insurance market softness. Doyle said that Marsh McLennan is observing “decreasing property/casualty prices but also a growing cost of risk.”

“Over time, this trend is unsustainable,” he added.

Insurance folks regularly warn that the growing trend of “nuclear” jury verdicts exposes companies (and their insurance) to larger legal risks, which leads to higher claims costs and, consequently, more expensive insurance policies. They also point out that the growing frequency and severity of natural catastrophes (including wildfires) can rack up insurance claims and cut into carriers’ profitability.

Insurance companies are especially wary of declining property insurance pricing.

Travelers reported a 6% decrease in premiums written for its “national property and other” business segment in Q3, according to an earnings release. This is to be expected, given the state of the market, Travelers CEO Alan Schnitzer claimed in a recent earnings call.

“Over time, particularly as catastrophic events inevitably unfold, the value of that discipline and the cost of those who abandon it will become unmistakable,” Schnitzer told investors. We heard similar rhetoric from insurers last quarter.