Navigating a Challenging Market in 2025: How Property Owners Can Stay Ahead on their Commercial Property Renewals
Trevor Elliott
Strategic Business Insurance Negotiator | Advocate for Business Owner Successes | Girl Dad 2x | PNW Born and Raised
?? The property insurance market has seen major challenges to profitability, as it has dealt with rising operating expenses related to construction and labor costs as well as increased frequency of natural disasters. This coming year certain classes of commercial property could finally see some insurance rate relief as the hard market conditions are expected to ease thanks to many insurance company’s efforts to restore profitability through the increased premiums of the past few years and underwriting discipline.
?? Bad News:
Increased Frequency of Natural Disasters: Catastrophic events such as hurricanes, wildfires, and floods continue to increase in frequency and severity, pushing insured losses to record highs. In 2023 natural catastrophe losses within the U.S. exceeded $79 billion with 26 separate events causing at least $1 billion in damage1, with commercial properties bearing a significant share.
Skyrocketing Repair and Rebuilding Costs: Inflationary pressures nationally over the last few years have driven up the cost of materials and labor. As a result, property claims now cost significantly more to settle, with average rebuilding costs up nearly 18% compared to five years ago.2
Reduced Capacity: Many insurers are scaling back their exposure to high-risk regions and classes of business, leading to fewer options and stricter underwriting for commercial property policies in those segments.
?? Good News:
Risk Mitigation Incentives: Many insurers now offer premium credits for businesses investing in risk management and preventative maintenance of their properties. Measures like updating an older roof, advanced fire suppression systems or security alarm systems can not only reduce risk but also save money.
Emerging Technology: The rise of predictive analytics and AI-driven risk assessment enables underwriting to offer tailored solutions, which can reward proactive businesses with better rates and coverage options on certain classes of business.
Market Adaptation: While some carriers are withdrawing in the tougher classes there is now increased competition for property insurance in the market, which have had years of double-digit rate increases on renewals. For many classes we are seeing a less than 10% increase for the first time in years but commercial property rates will still be heavily depending on property risk profile such as occupancy, business class, loss control, claims history and catastrophic exposure.3
?? Best Practices:
Conduct Regular Property Assessments: Ensure your property’s insured value reflects current replacement costs to avoid being underinsured with increased property replacement values in the event of a loss.
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Package Policies: If possible, consolidate your commercial property insurance with other lines of coverage to maximize leverage and gain negotiating power with insurance companies.
Evaluate Deductible Strategies: Higher deductibles can reduce premiums, if you are able to handle a larger deductible and haven’t had a loss on your property in years it may make sense to increase your deductible which can also be seen favorable to your underwriting risk profile because it shows you are not looking to turn in the small claims but use insurance for the largest incidents.
Prepare for Renewals Early: With the market changing constantly, early engagement with your broker can help you secure the best terms and pricing.
Final Thought: Communicate and Strategize
The commercial property insurance market in 2025 will require Commercial Property owners to stay proactive and well-informed to put themselves in the best position for their renewals. Partnering closely with a broker who has a strategy to run the most effective plan for your properties, implementing risk management practices, and planning strategically will put you in the best position!
Thanks for taking the time to read the latest edition of The Broker’s Edge on Insurance!
I’m Trevor Elliott, a Commercial Insurance Broker with over a decade of experience working with business owners across various industries. My goal is to provide valuable insights to the insurance industry and strategies to help business owners navigate the world of insurance with confidence.
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