Risk Management Insights

After several years of rising premiums and tightening terms, the commercial property and casualty (P&C) market is finally showing signs of relief. For construction companies, this shift could mean new opportunities to optimize coverage and reduce costs—but it’s important to understand what’s driving these changes and how to take advantage of them.

What’s Driving the Soft Market?

According to Holmes Murphy’s Winter 2025 Market Report, competition among carriers and increased capacity are the primary forces behind the softening trend. Here are the key factors:

• Carrier Competition: More insurers are aggressively pursuing business, creating downward pressure on rates.
• Improved Reinsurance Market: Lower reinsurance costs have allowed carriers to offer better terms.
• New Market Entrants: Fresh players in the property space are fueling competitive pricing and broader appetite.

Rate Trends to Watch

• Commercial Property: For the first time since 2017, property rates decreased—averaging -0.2% in Q3 2025 compared to a 1.9% increase in Q2.
• Umbrella/Excess Liability: Rate increases slowed dramatically, dropping from 11.5% to 5.5%.
• Cyber, D&O, EPLI, and Workers’ Comp: These lines are seeing rate reductions thanks to excess capacity and strong competition.

Small accounts (under $250K premium) saw the biggest improvement, with average increases falling from 4.2% to 1.2% quarter-over-quarter.

What This Means for Construction Firms

For contractors and builders, this environment offers a chance to:

• Revisit Property Coverage: Non-admitted markets are offering double-digit decreases and improved terms.
• Negotiate Better Umbrella Limits: With excess capacity, higher limits may be more affordable.
• Enhance Cyber Coverage: Competitive pricing makes it easier to secure robust protection against growing digital risks.

Proceed with Caution

While the market is softening, carriers remain conservative on catastrophe exposures—wind, hail, flood, and wildfire risks still drive deductibles and underwriting scrutiny. Additionally, supply chain disruptions and tariff uncertainty keep insurance-to-value under the microscope.

Action Steps for 2025

• Review Your Program: Don’t assume last year’s structure is still optimal—shop the market.
• Demonstrate Risk Management: Strong safety and loss control practices help secure the best terms.
• Plan Ahead: Use this window of opportunity to lock in favorable rates before conditions shift again.

Bottom Line: The softening market is good news for construction businesses, but it’s not a free pass. Strategic planning and proactive risk management remain essential to capitalize on these trends.