The Hard Market Turned: Where Rates Stand in Q1 2026
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- 10 min read
Cottingham & Butler | Commercial Insurance Market Index
After 32 straight quarters of increases, the commercial market posted its first broad decline since 2017. Property has swung competitive, casualty is firming, and commercial auto remains a market of its own. Here’s what moved, why, and how to think about it.
Overall market | Quarters ended | Commercial property | Commercial auto |
−1.2% | 32 | −5.5% | +5.8% |
For the first time since 2017, commercial insurance rates broadly declined. The Q1 2026 market index registered a 1.2% average reduction, ending a remarkable run of 32 consecutive quarters of increases. The hard market that defined renewals for the better part of a decade has given way to more competitive conditions — though, as always, unevenly.
The shift is clearest in property, which has swung from years of steep increases into a genuinely competitive market. Workers’ compensation, management liability, and cyber remain buyer-friendly. Casualty lines — general liability and umbrella — are still firming, and commercial auto continues on the separate, upward track it has held for years.
Rates by coverage
The headline reduction masks real divergence between coverages. Property led the decreases as insurers returned to competition; workers’ compensation and cyber extended declines that have run for over a year. General liability and umbrella continued to rise on litigation severity, and commercial auto posted the largest increase of any line — its 59th consecutive quarterly increase. The market is broadly softer, but far from uniform.
Coverage | Q1 2026 avg. change |
Commercial Property | −5.5% |
Workers’ Compensation | −3.7% |
Cyber | −3.5% |
Directors & Officers / EPLI | −2.1% |
General Liability | +2.6% |
Umbrella | +4.8% |
Commercial Auto | +5.8% |
Source: Council of Insurance Agents & Brokers Commercial Market Index, Q1 2026. Survey averages; individual accounts vary widely by exposure and loss history.
C&B Perspective
Survey averages describe the overall market, not any individual account. In practice, we see a much wider spread than the averages suggest. Accounts with clean loss history and well-documented exposures are landing at the favorable end of every range, while distressed risks continue to face firm terms — even in lines that are otherwise softening. The average is only the starting point; an account’s own loss history and exposure quality determine whether it beats the market or trails it.
How rates vary by program size
Insurance programs vary widely in size and complexity — from a single-location operation with a handful of coverages to a multi-site enterprise with layered programs across many lines — and the softening did not reach all of them at the same pace. For most of the hard market, increases hit medium and large accounts harder than small ones. This quarter, that pattern reversed.
Program size | Q1 2026 change | Read |
Small | +1.1% | Still rising, but slower |
Medium | −1.9% | Turned negative |
Large | −2.7% | Deepest decrease |
Source: CIAB Commercial Market Index, Q1 2026. Size reflects the commissions and fees a program generates — a proxy for how large and complex it is.
The largest, most complex programs posted the deepest decreases (−2.7%). These accounts attract the most insurer competition, and the organizations behind them tend to bring the data and leverage to capitalize on it. Mid-sized programs, flat the prior quarter, moved into decreases this quarter (−1.9%), a sign the relief is broadening beyond the biggest buyers. The smallest programs still saw increases (+1.1%), though more modest than before — smaller, more standardized programs are consistently the last to reflect a market shift. The pattern points in one direction: softening began at the top and is steadily moving down-market.
Property: a competitive market returns
Property is where the turn is most pronounced. After significant increases through 2022 and 2023, the line tempered in 2024 and softened through 2025 — and by Q1 2026, insurers had returned to active competition. The driver is profitability: a stretch of poor loss years gave way to improving results, and insurers now have appetite they’re willing to deploy.
It is, however, a tale of two markets. Risks that were hit hardest during the hard market — particularly those placed in the London and excess & surplus (E&S) markets — are now seeing significant, often double-digit, reductions. Standard-market risks are seeing a more measured range, from flat renewals to reductions in the 5–10% area. Every risk is treated on its own merits, and the gap between the best and worst outcomes remains wide.
C&B Perspective
The improvement traces in part to easing catastrophe losses — 2025’s roughly $101B in insured catastrophe losses came in well below 2024’s $180B-plus. But the underlying volatility hasn’t gone away. Severe convective storm activity (wind and hail) continues to drive losses, particularly across the Midwest, and insurers have responded with percentage-based wind/hail deductibles (commonly 1–3% of values) that shift more of that risk to the insured. Softer rate is real, but the structural exposure deserves the same scrutiny it did a year ago.
Casualty: general liability and umbrella keep firming
While property eased, the casualty lines moved the other way. General liability continued to firm, with rate increases in the low-to-mid single digits, as insurers cited rising loss severity — social inflation, and growing exposures such as PFAS and difficult product and food-related liability. The pressure is real, but the rate trend has been improving over the past year.
Umbrella tells a sharper version of the same story. Pricing began firming dramatically in 2019 and has continued through 2025, driven largely by commercial auto severity. Headline increases have started to plateau, but years of compounding remain on the books, and capacity at the higher layers ($10M and $25M) stays limited. Fleet-exposed accounts continue to face steeper increases than the broader market.
Why umbrella severity keeps climbing
Average commercial auto verdict: roughly $3.6M in 2010 to over $30M in recent years.
Average cost to settle a commercial auto fatality: about $1.9M in the mid-2000s to over $4M today, with a median verdict above $5M.
Nuclear verdicts: $10M–$100M awards leveling off after a post-COVID spike, while “mega” verdicts above $100M continue to rise.
Sources: industry verdict studies including Travelers’ Top-100 Verdicts of 2024 and CaseMetrix data; figures are illustrative of the severity trend.
Why commercial auto is still rising
Commercial auto is the exception that has now lasted 59 consecutive quarters. Its pricing tracks its own claims experience rather than the broader market cycle, which is why it can keep rising even as property and other lines fall. The line has been unprofitable for insurers in nearly every year for over a decade, and the rate increases — running in the high single digits and higher for fleet-heavy accounts — reflect a line still trying to reach breakeven.
What’s driving commercial auto claims
Liability severity & nuclear verdicts. Rising lawsuit severity and litigation financing keep pushing verdicts higher, with the largest awards reshaping insurers’ loss expectations across entire books.
Repair & replacement cost. Vehicle technology — sensors, cameras, driver-assist systems — makes every collision more expensive to repair, with parts and labor inflation compounding the effect.
Distracted driving. Distraction and congested roads keep claim frequency elevated, adding to the severity problems and keeping overall loss costs on a steady climb.
Driver shortage. A thin driver pool puts less-experienced operators behind the wheel, raising the stakes on hiring and retention and feeding the frequency problem.
Loss-trend detail per AM Best March 2026 commercial auto reporting.
The profitability gap explains why relief isn’t coming soon. Even after years of double-digit increases, the line’s 2025 combined ratio sat around 109%, meaning insurers still paid out more than they took in. The brief, COVID-related improvement of 2020–21 proved short-lived, and the unprofitable trajectory has continued since. Conditions are improving slightly, but auto remains the hardest line to place well.
The broader point isn’t that auto is uniquely difficult — it’s that not every coverage responds to the same forces. Some are priced on the broad market cycle; others, like auto, on their own claims history. Knowing which is which is the foundation of a sound renewal strategy in any market.
For Transportation Clients
Our transportation quarterly update goes deeper on what moves your cost — verdict exposure, telematics and safety data, and captive and deductible structures.
The buyer-friendly lines: comp, management liability, cyber
Workers’ compensation (−3.7%). Loss severity has improved on better safety and claims management, keeping the line competitive. The watch item is medical inflation — the medical portion of comp claims now exceeds 60% of costs and continued medical cost growth will eventually pressure rates.
Directors & Officers / EPLI (−2.1%). Competitive conditions and broad terms persist, even as claims frequency and severity continue — driven by wage-and-hour litigation and an elevated overall litigation environment.
Cyber (−3.5%). Pricing has stabilized as insureds improved IT protocols in response to ransomware. That stability may prove short-lived: underlying claims trends remain concerning, and the line could firm again if loss activity reaccelerates.
What it means for your industry
Your renewal will look very different from the headline, depending on which coverages make up most of your program. The reads below show what this quarter’s movement tends to mean industry by industry, so you know where the opportunity is and where to put your attention. Whatever your industry, the same logic applies: identify the coverages that carry the most premium, and track which way each one moved.
 | Trucking. The biggest cost is still rising. Commercial auto anchors the program and climbed again, so the broad softening reaches these businesses the least. Easing property and workers’ compensation help around the edges, but the fleet drives the total — and managing that line through safety, data, and structure matters more than any market shift. |
 | Distribution. A split picture. Easing property and warehouse coverage pull one way; the same rising auto costs that affect trucking pull the other. Where a distributor lands depends on how much of the program sits in the fleet versus the facilities — and the two halves are worth looking at separately. |
 | Manufacturing. Among the better-positioned. Property is typically the largest cost and fell the most, and insurer appetite is broad. Product liability and any owned vehicles work against that, but the weight of the program sits on the side that softened — making this a year where well-documented property exposures can benefit most. |
 | Construction. Mixed, and structure-dependent. Property eased while excess and umbrella rose and contractor coverage held roughly flat; contractors with large fleets also carry the auto increase. Because property and excess layers tend to set the tone, how the program is built matters more than any single coverage’s direction. |
 | Food & agriculture. Genuinely mixed. Property and equipment costs are easing, but product and food-liability exposure is exactly where general liability insurers are seeking rate — and any fleet adds auto pressure. The net depends on the balance of facilities, product, and vehicles in the program. |
 | Retail. Generally favorable. Property and cyber — the coverages that matter most to multi-location and online retailers — both fell. General liability is the offset to watch, particularly for high-traffic formats where customer-injury exposure is greatest. |
 | Professional services. A softer picture than in recent years, with directors & officers, employment-practices, and cyber coverage all easing. Firms with little property or vehicle exposure see the cleanest version of this quarter’s relief. |
 | Healthcare. Cross-currents. Easing workers’ compensation and cyber pull against firmer liability and rising medical severity. The outcome turns on the balance between staffing exposure on one side and clinical and professional liability on the other. |
 | Higher education. Broadly favorable on paper, as property, cyber, and management-liability coverage all eased — covering much of a typical campus risk profile. The exceptions to watch are owned vehicle fleets, abuse and athletics exposure, and anything tied to enrollment, where the broad trend may not hold. |
For Risk Management Clients
Our risk management quarterly update goes deeper on the market conditions, program structure, and trends shaping your renewal. Get the full outlook to see what this market means for your program.
Managing total cost of risk
A softer market naturally turns attention to rate — but rate is only part of what determines the long-term cost of a program. The more durable opportunity is what a market like this lets a business address in the underlying risk, because the same factors that shape pricing now are what hold it steady when the market turns back. It is also where an experienced advisor adds the most value: the difference between marketing a renewal and managing risk year-round shows up most clearly in conditions like these. A few principles shape how we approach a program heading into renewal:
Data quality drives the outcome. Insurers price against your claims history, exposure detail, and current values — so how that information is assembled and presented often matters as much as the underlying risk. Clean, complete, well-documented data is the single biggest factor in how a program is received, and in a competitive market it’s often what earns the better terms. The most effective programs are built and documented well before they reach the market.
Understand what’s driving each coverage. Some costs move with the broad insurance market; others, like commercial auto, move on a business’s own claims and the litigation environment around them. Knowing which is which sets realistic expectations — where the market itself will deliver relief, and where progress has to come from prevention and risk management. It’s the difference between hoping for a better renewal and knowing where one is actually possible.
Premium is one number; total cost of risk is the real one. Deductibles, how much risk a business keeps versus transfers, the cost of the claims that do occur, and the overall structure of a program all shape what coverage actually costs over time. A lower premium built on the wrong structure can cost more in the long run — which is why the structure, not the quote, is the right place to start.
Loss prevention compounds over time. The safety, claims-management, and loss-control work done between renewals is what bends the long-term cost curve. A softer market makes a strong track record more visible and more valuable — but it’s consistent investment over time, not favorable timing, that lowers the cost of risk.
Approach the market deliberately. A more competitive environment is the time to confirm a program reflects current conditions, surface potential issues early, and set renewal strategy well ahead of the deadline — rather than defaulting to last year’s program and terms. The earlier that work begins, the more leverage a business has when terms are set.
The organizations that treat renewal as a point-in-time price check tend to capture the least; those that manage total cost of risk year-round are positioned to benefit whichever way the market moves.
Signals for next quarter
Property capacity and discipline. The decreases came with a clear jump in insurer appetite. Whether insurers hold their pricing discipline as they compete — or over-correct to win business — will determine how long this relief lasts and how far it goes.
Auto claims, not the rate. Auto pricing follows auto losses, so the rate is a lagging signal. Verdict sizes and repair-cost inflation are the real indicators — they’ll show whether the line is moving toward relief long before the rate itself does.
Medical inflation in workers’ comp. Medical costs now make up more than 60% of comp claims, so sustained medical inflation is the most likely force to push that line’s rates back upward — the clearest thing to watch for a turn in an otherwise easing coverage.
Whether the softening spreads. Several coverages flattened this quarter rather than fell. If they tip negative over the next quarter or two, the competitive market broadens — and more of a typical program lands in buyer-friendly territory.
Know where the market stands. Know where you stand.
A turning market rewards preparation. Whether you’re heading into renewal, evaluating coverage, or looking for ways to manage rising costs in the lines that are still firming, our team brings the market knowledge and insurer relationships to help you make the right call — and the year-round risk and claims expertise that turns a market shift into a lasting advantage.
Analysis based on Cottingham & Butler’s review of Q1 2026 commercial property and casualty market conditions, including the Council of Insurance Agents & Brokers Commercial Market Index, AM Best market reporting, and industry catastrophe and verdict data. Rate ranges reflect Cottingham & Butler’s market observations; survey figures reflect CIAB averages across all account sizes. Industry and segment readings are directional; individual results vary by exposure, geography, and loss history.