Staying ahead of insurance premium trends is critical for managing business expenses. The Q2 2025 Ivans Index revealed shifts in commercial insurance rates. These could signal  savings or challenges, depending on your industry’s risks.

According to the Ivans Index for Q2 2025, commercial insurance rates have trended downward over the past two quarters. This could signal a softening market ahead.

Pricing across the major insurance lines

Ivans spotlighted premium renewal rates in the second quarter of 2025 across several standard commercial lines:

• Commercial auto rates decreased, to an average of 8.43%.
• Business owners policy (BOP) premiums decreased, to 7.87%.
• General liability premiums increased slightly, to 4.66%.
• Commercial property premiums showed a marked decline, to 7.89%.
• Umbrella rates decreased slightly, averaging 9.07%.

Cyber liability insurance pricing

According to the most recent Fitch Ratings, stand-alone cyber liability policy premiums declined by 3% in 2023 and have continued to fall for the second straight year into 2025.

Cyber insurance claims are evolving. It’s difficult to accurately price policies since the potential for claims is influenced by technological changes like artificial intelligence, rather than case law or regulations. Creating accurate cyber risk models is difficult. Cyberattacks are complex and harder to model than traditional risks, like weather patterns and natural disasters. Experts anticipate that cyber liability policies will continue to decline, barring a significant event.

Nonadmitted carriers have created competition, but also risk

More nonadmitted carriers are writing cyber insurance policies, increasing the competition in the market. However, nonadmitted carriers aren’t backed or regulated by the states, allowing them to set premiums and exclusions without scrutiny. If a nonadmitted carrier fails to price appropriately, it could go bankrupt. Without the state to bail it out, its policies would become null and policyholders would have no coverage. Make sure you’re OK with the risks before you sign.

Rates are constantly changing, even in good times

If it seems like insurance rates are continually changing, you’re right. But why do they change, especially if you don’t have a claim? Insurance is based on a fluctuating claims-based market that changes as risks change. Risks can be anything from extreme weather damage to liability resulting in nuclear verdicts ($10 million or more) to large-scale cyberattacks on infrastructure, like energy or health care.

All of these risks are possible, but insurance underwriters and actuaries calculate risk probability and intensity within a specific time frame. They use risk modeling based on large-scale data to see what risks will cost in a worst-case scenario. They also use detailed data about your business to see how likely it is that you will have a claim, and they price accordingly.

A quick overview of insurance trends and pricing

Insurance works on the idea that you pay a smaller price (your premium) into a larger pool (carrier portfolio of clients who are all paying premiums) to get a payout for the terms that you and your carrier agree on (your insurance contract). Insurance premiums are cheaper than self-insuring, allowing businesses to use the cash saved to reinvest in their business, instead of holding it in a savings account to cover a disaster.

Insurance carriers pool the premiums they collect from clients to pay for their clients’ damages. Carriers also invest these premiums to increase their savings, which they use to pay client claims, reinvest in programs or provide discounts to claims-free clients. Insurance carriers must balance their portfolio (premium-paying clients) and revenue investments (bonds, real estate, etc.) to ensure adequate reserves.

But when insurance payouts exceed what the carriers anticipated they’d need to pay for claims, they increase premiums and adjust their risk management strategy to avoid a cash shortfall.

How insurance carriers compensate for volatility

When reserves are low, they don’t take on too much risk. Instead, they drop riskier clients, increase premiums to reflect market risk, avoid unfamiliar or high-risk markets, and shift their investments to conservative investments, like bonds. When reserves are high, they retain riskier clients, expand into new markets and maintain more aggressive investment portfolios, which they sometimes share with their clients through premium refunds.

Carriers evaluate the likelihood and frequency of a business experiencing a catastrophic event, like a fire, flood, cyberattack or extreme liability lawsuit. Then they consider the controllable aspects of a business to determine a detailed risk profile.

For example, if your business had several claims due to theft, they’d ask about your security systems and proof that you’d upgraded them before they’d accept you as a commercial property client. If your business had a lot of employee injury claims, they’d want proof of your safety training and risk mitigation for a workers' compensation policy.

While you can’t easily control that your business is headquartered in Tornado Alley, you can control how you maintain your property, liability and employee training.

Macroeconomic trends and their impact on pricing

The broader insurance and reinsurance market dynamics highlighted by Fitch Ratings reinforce the themes in Ivans’ Q2 2025 data. Reinsurance is insurance for insurance companies. Reinsurance allows carriers to transfer portions of their risk to other insurers (reinsurers) to protect against large losses, like catastrophic weather. By sharing the financial burden, reinsurance helps carriers maintain financial stability and continue offering coverage to clients.

Increasing carrier competition, enhanced market capacity and falling reinsurance pricing are gradually softening the market. This is despite the ongoing risks of severe claims and natural disasters, like the 2025 wildfires.

But you won't get competitive pricing if your business isn’t considered a good risk. Making risk mitigation efforts and staying in touch with your agent are critical for lowering your rates.

Stay in touch with your Rathbun Commercial Account Executive ahead of your renewal for rate comparisons

The Q2 2025 softening trend could represent a window of opportunity for competitive rates. Reach out to your Rathbun Commercial Account Executive 90 days before your renewal so they can shop around for you. It takes time to assemble quotes for business insurance, so the more time you have, the better.

• As renewal, we will work together to assess your current coverage and identify potential savings across softening markets, like workers’ compensation and BOPs.
• Negotiate your terms. Insurance pricing is highly regulated. Carriers can’t offer insurance sales like you might get with other products. But they can evaluate their terms and conditions, explore better deductibles, and offer broader coverage. Your independent agent can help you identify insurance carriers that might negotiate coverage options.
• Capitalize on your risk mitigation. Property improvements using weather-resistant building materials or risk mitigation efforts like employee safety training can position you as a favorable risk.

Rathbun Insurance Producers and Commercial Account Executives work with underwriters daily and can be your advocate when presenting your business in a favorable light to the carriers that are the best fit for your business.