The commercial P&C insurance market reached an inflection point during the first quarter of 2026. According to The Council of Insurance Agents & Brokers’ (CIAB) Commercial Property/Casualty Market Index for Q1 2026, average commercial insurance premiums declined 1.2% across all account sizes, for the first time since Q3 2017. The decline also ends a 33-quarter run of rising premiums and signals that conditions have shifted towards a soft market.
The transition to a soft market has been driven by increasing carrier competition, expanding underwriting capacity, and improving loss performance across several major lines. While pricing divergence is present, as pressure remains in select casualty classes – particularly commercial auto – the broader market now reflects many of the characteristics typically associated with the early stages of a softening cycle.
Pricing momentum continues to ease
Premium declines were evident across most commercial lines during the quarter. Nine of the 16 lines tracked by CIAB recorded lower pricing, while six experienced modest increases and one (surety) remained unchanged. Even among the lines where premiums continued to rise, increases were generally limited to approximately 1% or less.
Commercial property saw the largest decline with average premiums falling 5.5%, followed by workers’ comp (-3.7%) and cyber (-3.5%). Respondents in CIAB’s survey noted that increased underwriting capacity and heightened competition for both new and renewal business contributed to a more favorable pricing environment for commercial property.
Survey respondents also noted broader underwriting flexibility, including expanded carrier appetite and more favorable terms. Risks that may have received limited interest during the hard market are now attracting increased competition.
Commercial auto remains the primary exception
Despite the broad market shift, commercial auto continues to be an outlier in overall pricing trends. Premiums increased 5.8% during Q1 2026, the largest increase among all commercial lines, extending a notable streak of 59 consecutive quarters of premium increases.
The line continues to face underwriting challenges driven by elevated claim frequency and severity, social inflation, litigation costs, rising medical expenses, and increasing vehicle repair and replacement costs. These factors have constrained insurer profitability for more than a decade. According to AM Best, commercial auto has generated annual loss ratios above 100% in every year since 2014, with the exception of 2021.1
How the shift impacts insurance brokers
For insurance brokers, the current environment presents an opportunity to revisit program structure, evaluate carrier relationships, and negotiate broader coverage terms. Brokers are increasingly able to leverage heightened carrier competition to improve pricing while securing enhanced policy terms and conditions.
The emergence of a soft market may signal a shift in the competitive landscape for agencies, brokers, and insurers. As pricing pressure moderates, organic growth will increasingly depend on client retention, new business production, and advisory capabilities rather than premium inflation alone.
For firms, this environment reinforces the importance of demonstrating value beyond market access. Clients will expect advisors to proactively remarket accounts where appropriate, identify opportunities to enhance coverage, and communicate evolving market conditions that support more strategic risk management decisions.
No one knows how long this soft market environment will last, but as pricing tailwinds diminish, it’s important that firms look towards differentiation through specialization, consultative expertise, and operational efficiency as competition increases.
Contributions to this article by: Eric Hallinan, MarshBerry Managing Director
Source:
1. https://riskandinsurance.com/commercial-pc-market-shifts-into-reverse-as-soft-market-takes-hold/
