Commercial P&C Rate Growth Flattens To Softest Levels Since 2017, Alera Group Finds

Average overall premium growth across commercial property and casualty lines flattened to just 0.2% in the first half of 2026, according to Alera Group’s 2026 Property and Casualty Market Update.

The firm cited data from The Council of Insurance Agents & Brokers showing these are the softest P&C market conditions since 2017. Numerous respondents to Alera Group’s own Q2 2026 Market Update survey, which polled in-house experts as well as wholesale and carrier partners, reported lower pricing, more flexibility in underwriting terms and broader appetite from insurers, including for businesses previously declined coverage.

“After several years of sustained market hardening, we’re seeing meaningful signs of stabilization across much of the property and casualty market, with commercial property leading the way as competition increases and market conditions continue to soften,” said Justin Foa, executive vice president and national Property and Casualty practice leader at Alera Group.

Alera Group attributed the shift to a strong financial position across the insurance sector: reinsurance pricing and limits have stabilized, balance sheets are healthy and capital surplus is at a record high. Insurer returns are forecast in the 10% to 12% range, a historically strong figure, while combined ratios remain below 100, the report said.

A Widening Split Between Property Gains And Casualty Pain

The market update found sharp divergence in the outlook for the rest of 2026 by line of business.

Commercial property rates are forecast to fall 4% on average, with rate reductions for “sought-after policies” routinely landing in the 10% to 30% range, driven in part by expectations of a mild 2026 hurricane season. Directors & officers liability rates are down 3% for private companies and 6% for public companies, while cyber liability, employment practices, environmental and surety are largely stable.

Alera Group said insurers have capacity to invest in profitable segments and are willing to compete, creating conditions favorable to buyers seeking higher limits, lower deductibles and fewer exclusions.

The outlook for certain casualty lines tells a different story. Commercial auto rates are expected to increase 8% on average, and umbrella/excess liability rates are projected to climb 11%, the steepest increases among all lines tracked. The report attributed this to claims severity, jury verdicts and litigation costs, noting commercial auto has posted 14 consecutive years of underwriting losses.

General liability rates are expected to rise a more moderate 4%, with the report describing that market as having “stabilized somewhat,” though higher-hazard businesses and companies in litigious jurisdictions still face difficult conditions. Medical professional liability rates are rising 7% on average, with the steepest increases tied to litigious states such as New York, New Jersey and Florida, and to high-risk specialties including neurosurgery, OB-GYN and cardiac surgery.

Alera Group cautioned that average rates reflect broad market direction rather than outcomes for any individual business, noting that leverage depends heavily on coverage line, operational risk and geographic footprint.

Insurers Narrow Coverage Even As Prices Ease

Even as headline rates soften, the report found insurers are protecting profitability by tightening policy language and narrowing coverage through exclusions rather than raising premiums outright.

In general liability, for example, current policy forms include generative AI exclusions that strip out coverage for third-party bodily injury, property damage or advertising injury tied to machine-learning outputs. In cyber liability, insurers are capping or declining to pay claims tied to systemic issues such as global cloud outages, hacking linked to outdated software, or state-sponsored cyberattacks.

Environmental policies are increasingly carrying broad PFAS and chemical exclusions across general liability, product liability and environmental liability coverage.

The report also highlighted the growing role of data and technology in underwriting decisions. Most underwriters no longer manually review application data, instead relying on digital platforms that grade submissions based on data quality, and submissions lacking credible or pertinent data fall toward the bottom of the pile, according to Alera Group.

In commercial property, insurers are using satellite imagery and regional hazard data to assess buildings before ever reviewing an application, while in homeowners insurance, insurers are using satellites and drones to flag risks such as roof degradation or unpermitted pools, with some non-renewal notices triggered automatically.

The report also noted that underwriters are increasingly folding cybersecurity assessments into physical property risk reviews, treating weak building management systems and poor cyber controls as a physical hazard that can raise premiums or trigger exclusions.

Obtain the full report here. &