As of September 2026, commercial insurance rates have now fallen for eight consecutive quarters. As a result, buyers are currently getting their ‘best deal’ in years. In fact, in the second quarter of 2026 alone, global commercial insurance rates declined by 6%.
However, in such a soft market, it’s also vital that buyers remember that falling premiums and cheaper renewal rates do not automatically mean better cover. Because of that, if your business is chasing the cheapest possible renewal rate, then it may be searching for a policy that doesn’t adequately cover the risks faced by the business.
So, as the soft market continues to deepen as we head towards 2027, here’s what you should be searching for…
The Current State of the Commercial Insurance Market
For the past eight quarters, we’ve been in a ‘soft’ insurance market that has presented numerous opportunities for buyers. This is because, for the past two years, insurers have been aggressively competing for business. This has led to lower premiums and readily available coverage, even in riskier insurance markets that are traditionally more challenging. In fact, in Q2 of 2026, we’ve even seen prices fall in high-hazard industry sectors and large natural catastrophe exposures.
Added to this, due to increased capital and competition in the markets, many insurers have also made their terms and conditions more flexible in order to increase their competitiveness. For example, while some insurers have made their wording broader in meaning, others have increased their coverage limits. Finally, it’s worth noting that some insurance companies have also become less stringent in their risk assessments, with long-term agreements readily available for buyers.
But, it’s worth keeping in mind here that the insurance market is cyclical. This means that a reversion to a hard market is almost inevitable – it’s a matter of when, not if. It will only take one large geo-political event or a natural disaster to over-expose some insurers and make others less willing to take on risk. As a result, now is the perfect time to evaluate the level of insurance you have. If you believe you may be under-insured, now is the time to take out additional cover.
What Has Caused the Soft Market?
The commercial insurance market is cyclical in nature. For it to be a ‘soft market’, at least two of the following three factors need to occur:
- Increased capital must enter the market
If the insurance industry is profitable, more people will look to enter it. This means that new insurers will appear and new capital will flood the market. At this stage, the extra money and extra insurers creates a much greater level of competition, as a higher number of businesses are competing for the same number of policies. Due to this, premiums fall.
- Low levels of loss
Large scale claims put a huge amount of pressure on the insurance market. When something like a natural disaster occurs, insurance providers must pay out large sums. However, if we go years without a large scale claims event, the financial strain placed on insurers is minimised and insurers have a greater appetite for taking on more risk.
Here though, it’s important to stress that even a single geo-political event or natural disaster has the ability to significantly harden the market. For example, estimates suggest that the September 11 terrorist attacks cost the global commercial insurance and reinsurance industry approximately $40 billion to $60 billion in insured losses. As a result, commercial insurance rates in New York in the aftermath spiked by more than 73%!
- Insurers receive investment returns
The wider economy also plays a role here. For example, if interest rates are high or stock market performance is strong, insurers are able to generate profit from their investments. This enables them to lower premiums on the underwriting side.
The Problems Associated With a Soft Insurance Market
It’s true what they say: ‘all that glitters isn’t gold’. Although buyers are attracted by cheap premiums, these policies can expose buyers to a significant amount of risk and leave them under-insured.
After all, now we’ve been in a sustained soft market for two years, we’re seeing many providers significantly lower the cost of their premiums. Some may even be pricing some policies below cost in order to gain market share. However, it’s important to note that these losses are not sustainable in the long run, which means these providers will either hike their rates sharply or withdraw capacity entirely when the cycle inevitably ‘hardens’ once more.
Alongside this, other providers will increase their flexibility on policy wording and will carry out less stringent risk assessments. Of course, both of these things can provide benefits to buyers. However, as Matt Mawson from Eximia Broking notes, they can also lead to hidden ‘coverage gaps’ that can be hugely problematic if a claim needs to be made.
As a result, he recommends that although you should still take advantage of the pricing benefits that are provided by the soft market, you should always take extra steps to ensure that the cover you’re buying is adequate. This way, you can ensure that your business receives an appropriate level of protection and you won’t partner with a provider who pulls the plug when the market hardens once more.
Looking to 2027 and Beyond
At present, there’s no sign of the soft market slowing down. Last year’s benign natural catastrophe experience, combined with insurers’ ongoing focus on retaining business and delivering growth, means the current outlook is likely to remain buyer-friendly in the medium term.
However, it’s important to remember that hard markets always last longer than soft ones do. When the market does eventually harden, potentially towards the end of 2027 or the start of 2028, we’ll likely see many insurers either pull away from particular classes entirely, or increase their prices substantially. When they do, they’ll likely keep these prices higher for longer so they can recoup their losses from the soft market conditions.
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