The commercial property and casualty insurance market entered a clear soft market cycle in the first quarter of 2026, according to The Council of Insurance Agents & Brokers’ (CIAB) latest Commercial P&C Market Index. For the first time since 2017, brokers reported an overall decline in premiums across all account sizes, signaling a significant shift in underwriting conditions and carrier competition.
The report, covering January through March 2026, revealed that average premiums across all account sizes fell by 1.2%, ending a 33-quarter streak of premium increases. The decline marks one of the clearest indicators yet that the hard market conditions dominating commercial insurance over the past several years are easing.
Soft Market Conditions Accelerate
According to respondents surveyed by CIAB, increased carrier appetite, more flexible underwriting standards, and aggressive competition for both new and renewal business drove the market softening in Q1 2026.
Large commercial accounts experienced the steepest declines, with premiums dropping an average of 2.7%. Medium-sized accounts declined 1.9%, while small accounts remained slightly positive with a 1.1% increase.
The report described the quarter as a major turning point for the market:
- Overall average premium change: -1.2%
- Large account premium change: -2.7%
- Medium account premium change: -1.9%
- Small account premium change: +1.1%
CIAB noted this was the first overall premium decrease since Q3 2017.
Commercial Property Leads Premium Declines
Commercial property saw the sharpest premium decreases of any major line, falling by an average of 5.5% during the quarter. That represented a dramatic shift from the modest 0.7% decline reported in Q4 2025.
Survey respondents attributed the decline to increased underwriting capacity and heightened competition among insurers. According to the report, 72% of respondents observed increased property underwriting capacity, with some describing the increase as “significant.”
The report also cited improving carrier profitability as a contributing factor. AM Best data showed the commercial property annual loss ratio improved from 87.9% at the end of 2024 to 85% at the end of 2025, despite severe wildfire and storm activity.
Brokers reported that even catastrophe-exposed property risks saw improved pricing and underwriting terms in some cases.
Commercial Auto Remains the Outlier
While most lines softened, commercial auto continued to face persistent upward pricing pressure. Premiums increased an average of 5.8% in Q1 2026, marking the 59th consecutive quarter of increases.
Commercial auto was once again the line with the highest average premium increase. Respondents cited continued challenges tied to:
- Social inflation
- Nuclear verdicts
- Distracted driving
- Rising medical costs
- Inflation-driven repair and replacement expenses
- Increased vehicle technology costs
AM Best characterized commercial auto as “one of the worst-performing P&C segments over the last ten years,” noting that the line has posted underwriting losses nearly every year since 2014 except 2021.
Despite some easing in underwriting conditions, the line remains structurally challenged due to claim severity and frequency trends.
Cyber and Workers Compensation Continue to Decline
Cyber liability and workers compensation also continued their downward pricing trends in Q1 2026.
- Cyber premiums fell by 3.5%
- Workers compensation declined by 3.7%
Other lines experiencing decreases included:
- Business interruption: -1.9%
- D&O liability: -2.1%
- Employment practices liability: -1.8%
- Marine: -1.0%
- Terrorism: -0.6%
Meanwhile, general liability and umbrella coverage continued to see moderate increases of 2.6% and 4.8%, respectively.
Regional Trends Show Widespread Softening
The softening trend appeared across most U.S. regions, although severity varied.
The Southwest region reported some of the most aggressive commercial property declines, with many respondents indicating decreases between 10% and 30%.
The Southeast and Midwest also experienced broad declines in property and workers compensation pricing, while commercial auto remained elevated in every region surveyed.
Meanwhile, Pacific Northwest respondents generally reported flat-to-soft conditions across most lines, suggesting stabilization rather than aggressive price reductions.
What This Means for Insurance Buyers
The Q1 2026 report suggests insurance buyers are gaining negotiating leverage after several years of sustained rate increases and restricted underwriting conditions.
Carriers are increasingly competing for business by:
- Expanding underwriting appetite
- Offering broader terms and conditions
- Reducing pricing
- Increasing available capacity
For insureds with strong risk profiles and favorable loss histories, the current market may create opportunities to secure broader coverage at improved pricing levels.
However, commercial auto remains a major challenge, and organizations with fleet exposure are likely to continue experiencing premium pressure despite broader market softening.
Overall, the CIAB report indicates the commercial insurance market has transitioned decisively away from the hard market environment that defined much of the early 2020s. Whether the current softening develops into a prolonged soft market cycle will likely depend on catastrophe losses, economic conditions, litigation trends, and underwriting profitability throughout the remainder of 2026.
Information for this article was provided by The Council of Insurance Agents & Brokers. Views and claims expressed in this article are those of the source company and do not necessarily reflect the views of AgencyEquity.com. This article may have been edited with the help of AI.
