The Softening Accelerates: Where Rates Stand in Q2 2026
Cottingham & Butler | Commercial Insurance Market Index
The turn that started in Q1 is broadening. Q2 posted a second straight quarterly decline, property is leading the drop, and auto and umbrella are still climbing. Here is what moved, why, and how to think about it.
Q2 2026 was the second consecutive quarter of broad rate declines. The market index registered a 2.0% average reduction, deeper than the 1.2% decline in Q1 and the first back-to-back drops since the run of 32 straight quarterly increases ended in late 2025. The hard market that defined renewals for most of a decade has given way to more competitive conditions, and this quarter it moved faster.
One reminder before the numbers. These survey indexes are lagging indicators. They describe where renewals landed a quarter ago, not what is happening in the market today. On the ground, conditions are moving faster than the published averages suggest, and carriers are already competing harder than a one-quarter-old number can show.
Property has swung into a genuinely competitive market. Workers’ compensation, management liability, and cyber remain buyer-friendly. General liability and umbrella are still firming, and commercial auto continues on its own upward track.
Overall market | Quarters ended | Commercial property | Commercial auto |
−2.0% | 32 | −6.3% | +4.5% |
Rates by coverage
The headline reduction masks real divergence between coverages. Property led the decreases and accelerated its decline, while workers’ compensation, cyber, and management liability stayed competitive. General liability and umbrella kept rising on litigation severity, and commercial auto posted its 60th consecutive quarterly increase. The market is broadly softer, and softening faster, but far from uniform.
Coverage | Q1 2026 avg. change |
Commercial Property | −6.3% |
Workers’ Compensation | Continued easing |
Cyber | Declines flattening |
Directors & Officers / EPLI | −1.8% (in the -1% to -3% range) |
General Liability | +2% to +5% |
Umbrella | +5.3% |
Commercial Auto | +4.5% |
Source: Council of Insurance Agents & Brokers Commercial Market Index, Q2 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. Accounts with clean loss history and well-documented exposures land at the favorable end of every range, while distressed risks continue to face firm terms, even in lines that are otherwise softening. And a softening index does not mean carriers hand back rate. Underwriters resist a turning market. They still press for increases on lines like auto and umbrella, and they push back on property reduction requests. Our role is to push back in return, to advocate for our clients, and to secure the market-competitive terms the broader market now supports. An account’s own loss history, exposure quality, and how hard its program is marketed determine whether it beats the market or trails it.
How rates vary by program size
The softening did not reach every program at the same pace. For most of the hard market, increases hit medium and large accounts harder than small ones. That pattern has reversed. The largest, most complex programs are posting the deepest decreases, because they attract the most insurer competition and bring the data and leverage to capitalize on it. Mid-sized programs have moved into decreases as well, and the smallest, most standardized programs are the last to reflect a shift and are still seeing modest movement. Softening began at the top and is steadily moving down-market.
Property: the softening accelerates
Property is where the turn is most pronounced, and Q2 sharpened it. After significant increases through 2022 and 2023, the line tempered in 2024, turned slightly negative in the back half of 2025, and dropped to −5.5% in Q1 and −6.3% in Q2. The driver is profitability. A stretch of poor loss years gave way to improving results, and insurers now have appetite they are willing to deploy.
It is, however, a tale of two markets. Risks hit hardest during the hard market, particularly those placed in the London and excess and 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 to 10% area. Every risk is treated on its own merits, and the gap between the best and worst outcomes remains wide.
This is where advocacy matters most right now. Standard-market carriers will hold the line on rate if a program is not marketed and messaged well. Our marketing leaders are actively working these conditions with standard-market underwriters, pushing for the reductions the broader market supports rather than accepting a flat renewal by default.
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 has not 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 and hail deductibles (commonly 1 to 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 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 into 2026, at +4.8% in Q1 and +5.3% in Q2, driven largely by commercial auto severity. 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.
An improving broader market does not justify every increase a carrier requests. Where a double-digit umbrella increase is not supported by an account’s own loss experience, it deserves a hard push back, and that is where marketing the program and advocating on the client’s behalf earns its keep.
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 to $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 60 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. That said, the increase is lessening. Auto has come down slightly in each of the past six quarters and sits at +4.5% in Q2, in the +4% to +8% range across the market. After years of relentless rate, the industry may be starting to turn the corner on profitability, even if it is not there yet.
What’s driving commercial auto claims
Liability severity and nuclear verdicts. Rising lawsuit severity and litigation financing keep pushing verdicts higher, reshaping insurers’ loss expectations across entire books.
Repair and replacement cost. Vehicle technology, sensors, cameras, and 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.
Driver shortage. A thin driver pool puts less-experienced operators behind the wheel, feeding the frequency problem.
The line’s 2025 combined ratio sat around 109%, meaning insurers still paid out more than they took in, and the line has been unprofitable in 14 of the past 15 years. Conditions are improving slightly, but auto remains the hardest line to place well. The broader point is not that auto is uniquely difficult. It is 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.
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. 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 growth, along with rising wages on the indemnity side, will eventually pressure rates.
Directors and Officers / EPLI (about −1.8%). Reductions held steady in the −1% to −3% range and are likely to stay stable, even as claims frequency and severity continue, driven by wage-and-hour litigation and an elevated litigation environment.
Cyber. Pricing has stabilized as insureds improved IT protocols in response to ransomware. The market may be nearing the floor. Declines are likely to flatten, and rates could begin to rise again, though at a far slower pace than the last cycle, 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. Whatever your industry, the logic is the same. 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. |
 | 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. |
 | Manufacturing. Among the better-positioned. Property is typically the largest cost and fell the most, and insurer appetite is broad. Product liability and owned vehicles work against that, but the weight of the program sits on the side that softened. |
 | Construction. Mixed, and structure-dependent. Property eased while excess and umbrella rose and contractor coverage held roughly flat, and contractors with large fleets carry the auto increase. 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. |
 | 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. |
 | Professional services. A softer picture than in recent years, with directors and officers, employment practices, and cyber coverage all easing. Firms with little property or vehicle exposure see the cleanest 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 and clinical and professional liability. |
 | Higher education. Broadly favorable on paper, as property, cyber, and management-liability coverage all eased. The exceptions to watch are owned vehicle fleets, abuse and athletics exposure, and anything tied to enrollment. |
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. It is also where an experienced advisor adds the most value. 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. In a competitive market, clean, well-documented data is often what earns the better terms.
Advocacy still matters in a soft market. A falling index does not mean carriers volunteer rate relief. Marketing a program hard, meeting with carriers on strategy, and holding them to market-competitive terms is what converts a favorable market into a favorable renewal.
Understand what’s driving each coverage. Some costs move with the broad market, others, like commercial auto, on a business’s own claims. Knowing which is which sets realistic expectations for where the market will deliver relief and where progress has to come from risk management.
Premium is one number; total cost of risk is the real one. Deductibles, retained risk, the claims that do occur, and program structure all shape what coverage actually costs over time. A lower premium built on the wrong structure can cost more in the long run.
Approach the market deliberately. A more competitive environment is the time to validate the market, surface issues early, and set renewal strategy well ahead of the deadline. 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
Whether the softening keeps accelerating. Q2 deepened Q1’s decline. If property and the flattening lines keep moving, more of a typical program lands in buyer-friendly territory.
Property capacity and discipline. Whether insurers hold their pricing discipline as they compete, or over-correct to win business, will determine how long this relief lasts.
Auto claims, not the rate. Auto pricing follows auto losses, so the rate is a lagging signal. Verdict sizes and repair-cost inflation will show whether the line is moving toward relief long before the rate does.
Umbrella discipline. Umbrella increases ticked up again in Q2. Watch whether carriers distinguish genuinely fleet-heavy, loss-driven accounts from clean ones, or keep pushing broad double-digit increases the market no longer justifies.
Cyber finding its floor. Declines are flattening. If ransomware loss activity reaccelerates, cyber is the line most likely to firm first.
Medical inflation in workers’ comp. Medical costs now make up more than 60% of comp claims, the clearest force that could push that line’s rates back upward.
Know where the market stands. Know where you stand.
A turning market rewards preparation. Whether you are 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, insurer relationships, and advocacy 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 Q2 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.