Key Market Trends: The Evolving Commercial Insurance Landscape

As risk environments grow more complex, businesses must adapt their insurance strategies to stay protected and competitive. From cyber threats to environmental exposures, employment practices, M&A transactions, and property risks, each area presents distinct challenges and opportunities for tailored coverage and proactive risk management.

Hylant’s 2025 Q3 Market Update offers invaluable insights into commercial insurance market trends. The following post presents a few highlights. To get your free copy of the complete report, click here.

Property Insurance: A Relatively Buyer-Friendly Market Emerges

After years of hard market conditions, property insurance is finally offering relief. Increased competition and abundant capacity are driving double-digit rate reductions for clean accounts, especially in large commercial risks and shared/layered programs. Reinsurance renewals have been favorable, enabling broader coverage and more flexible terms.

While underwriting remains cautious, buyers with strong data and proactive risk management are securing better deals. The market remains bifurcated: distressed risks still face scrutiny. Insurers are leveraging AI, IoT, and satellite imagery to enhance risk assessment and streamline claims, reshaping how underwriters evaluate exposures and how buyers interact with carriers.

Now is a good time for insureds to review their insurance program structure. Layered setups often yield better pricing than single-carrier models. Replacement cost valuations must be current because outdated figures can lead to coverage gaps. Retention levels also deserve a fresh look, as unchanged deductibles may no longer reflect actual risk.

Employment Practices Liability: Competitive Yet Cautious

The employment practices liability (EPL) market remains competitive, but signs of firming are emerging. Insurers are committed to writing new business and offering favorable renewals, though companies with challenging exposures—such as those in California or high-risk industries like healthcare and retail—may face higher premiums and retentions.

Privacy and Biometric Information Privacy Act (BIPA) exclusions are increasingly common, driven by rising claims. Defense cost sublimits may be available depending on employee location and application responses. Meanwhile, new executive orders around diversity, equity, and inclusion (DEI) could impact anti-discrimination compliance, creating new legal complexities.

Allegations of discrimination, wrongful termination, and wage and hour violations continue to be the leading causes of loss. To mitigate exposure, businesses should review policies regularly and ensure HR practices align with current legal standards.

Cyber Risk: Rising Risks, Evolving Rules

Each industry faces unique cyber-related threats, and insurers evaluate them differently when determining renewal rates. Strong cybersecurity controls remain the top priority for underwriters, but organizations can improve their positioning before and after a cyber event by tailoring coverage forms, limits, choice of vendors, and available tools.

The rise of AI tools like ChatGPT has made it much easier for hackers to deceive employees. Social engineering and invoice manipulation claims are becoming more sophisticated. Implementing best practices, such as callback procedures, dual approvals, and transfer limits, can significantly reduce the frequency and severity of these events.

Regulatory oversight and mandatory actions before and after a cyber event are evolving rapidly. States are introducing privacy and AI-related regulations that directly impact cybersecurity practices. Staying informed and engaging your insurance broker, carrier, and breach response experts can help reduce the risk of additional fines and penalties following an incident.

Environmental Insurance: Stability with Strategic Adjustments

The environmental insurance market remains stable, supported by healthy competition and steady rates. Blended general liability/pollution policies are seeing flat to modest renewals, while monoline pollution rates are holding or declining.

However, underwriting is tightening, and exclusions like PFAS and wildfire are becoming more common. Still, exclusions can often be negotiated with strong supporting data. Businesses in sectors facing increased claims—such as healthcare (mold and Legionella) and railroads (derailments)—may benefit from multiyear placements that lock in rates and preserve broader coverage terms.

The Trump administration streamlined federal permitting, speeding up reviews and expanding exclusions. While this accelerates projects, it may raise environmental risks. Transactional pollution liability and contractors pollution liability policies can help protect against unknown pollution risks.

M&A and Transaction Solutions: Opportunity in a Competitive Market

The representations and warranties insurance (RWI) market remains favorable despite macroeconomic headwinds. Deal volume may be down, but valuations are rising, and insurer competition is keeping pricing and coverage stable. Increased capacity and new carrier entrants have made RWI more accessible, especially for transactions under $50 million.

Lower minimum premiums and retentions are attracting lower middle market buyers, particularly in private equity-backed deals. RWI is also gaining traction in commercial real estate acquisitions, especially platform deals involving entities that hold real estate assets. These transactions benefit from RWI’s extended survival periods and broader coverage, offering a compelling alternative to traditional indemnities.

As deal activity rebounds, insurers are expected to tighten underwriting standards and scrutinize due diligence more closely. Recent claim trends are prompting carriers to reassess pricing discipline and retention structures, signaling a shift toward more selective risk assessment.

Download the Full Report

Market Update offers critical insights into the current state of commercial insurance, highlighting key trends and challenges across coverage types. Click here to download your free report. If you need help with commercial insurance or have questions, contact Hylant.

The above information does not constitute advice. Always contact your insurance broker or trusted advisor for insurance-related questions.