The commercial property insurance market has experienced consistent premium increases, with 2023 marking one of the most challenging periods. During that time, businesses saw premium increases exceeding 20%, a first in 20 years. In 2024, the market began showing signs of moderation. Premium growth rates slowed for many policyholders, with increases averaging 8% to 12% depending on risk exposure. Businesses with strong claims histories and properties in non-catastrophe-prone areas saw the most relief, with some renewals approaching flat rates. However, high-risk regions such as wildfire or hurricane zones continued to face limited capacity and higher costs.

The market shows signs of stabilization for 2025. Policyholders with strong claims histories can expect more manageable premium adjustments, often staying within single-digit rate increases. For properties in areas less exposed to natural disasters, premiums are expected to range from flat to modest increases up to 10%. However, challenges remain for high-risk areas (e.g., wildfire zones) where coverage options remain limited and higher costs persist.

Trends Shaping Commercial Property Insurance

Unprecedented Losses From Natural Disasters

Extreme weather events (e.g., hurricanes, tornadoes, hailstorms, wildfires) are becoming more frequent and devastating, placing significant financial strain on businesses. According to the National Oceanic and Atmospheric Administration (NOAA), the U.S. experienced 24 weather and climate disasters in 2024 (as of November 1), each causing losses exceeding $1 billion. These events included 17 severe storms, four hurricanes, one wildfire and two winter storms. The frequency and intensity of these disasters highlight the increasing threat extreme weather poses on businesses and communities.

Severe Storms

Severe storms have been a primary driver of losses. In the U.S., convective storms (e.g., tornadoes, hailstorms, straight-line winds) caused over $30 billion in insurance claims in 2024. Globally, severe thunderstorms in the first half of 2024 caused $42 billion in damages — 87% above the 10-year average. In 2025, the Los Angeles wildfires have caused unprecedented damage, with insured losses estimated at up to $30 billion, potentially the costliest wildfire in U.S. history.

Hurricanes

A category 4 storm, Hurricane Helene made landfall in Florida’s Big Bend region, becoming the strongest hurricane to ever strike the area, causing widespread flooding and power outages for millions and claiming over 90 lives. Its path stretched 600 miles inland, affecting nearly 162,000 commercial properties valued at $425.9 billion. Weeks later, Hurricane Milton struck Florida as a category 3 storm, with winds exceeding 120 mph. Milton’s storm surge and inland flooding compounded the devastation, hitting areas still recovering from Helene. Combined, insured losses are estimated between $35 billion and $55 billion.

Stabilized Reinsurance Market & Increase Capacity

The reinsurance market began stabilizing in 2024, supported by increased market capacity, thanks to financial tools like specialized securities and CAT bonds, which brought more capital into the market. Businesses absorbing more initial losses (higher retentions) have also helped reinsurers manage their risks, allowing insurers to offer more coverage. Companies in high-risk areas are turning to global and shared coverage options, shifting toward greater adaptability and resilience.

Closing the Gaps for Property Valuations

Insurance-to-value (ITV) remains a critical component of commercial property coverage. Maintaining accurate ITV calculations helps ensure your business is adequately covered and safeguards your organization from unexpected losses — especially as inflation and material costs fluctuate. Recent industry data shows that many businesses underestimate their property values by more than 30%, leaving significant coverage gaps. With inflation easing to 2.7% in November 2024, now is a good time to reassess your property values with tools like professional appraisals, adjusted fixed-asset records and benchmarking methods.

Exploring Alternative Risk Insurance Solutions

Challenges in the commercial property insurance market have driven interest in alternative risk transfer options, offering customized solutions and cost savings. Available options include:

• Captives: These self-insurance programs help businesses manage risk, reduce costs and enjoy tax benefits through tailored coverage.
• Structured Fronting: This strategy lets organizations control their risk while meeting regulatory needs, offering greater flexibility and alignment with broader goals.
• Parametric Coverage: This innovative solution provides payouts based on predetermined metrics (e.g., wind speed during a hurricane) rather than waiting for damage assessments. It’s grown rapidly, with submissions increasing by 500% in the past year.

Risk Management Strategies

Effective risk management strategies are essential to protect your commercial property, mitigate potential losses and keep insurance costs under control. Consider these actionable steps to enhance your property's resilience and reduce exposure to risks.

• Perform continuous maintenance. Keep your commercial property in optimal condition by promptly addressing maintenance issues to reduce claims and preserve coverage.
• Control disaster exposures. Evaluate natural disaster exposures specific to your property and implement mitigation measures (e.g., storm shutters, fire-resistant roofing)to reduce risks.
• Ensure precise property limits. Regularly review and adjust your property limits and insurable values to avoid underinsurance and penalties.
• Inspect & address risks. Conduct comprehensive property inspections to identify vulnerabilities and enhance resilience.
• Partner with your insurance advisor. Start renewals early and work with your broker to prepare high-quality applications that appeal to underwriters.
• Develop a business continuity plan (BCP). Document and test a BCP to ensure operational resilience during disruptions. 
• Report claims promptly. Notify your insurer immediately after damage occurs to speed up processing and limit further damage.
• Address carrier recommendations: Implement your carrier’s risk reduction suggestions to demonstrate your commitment to reducing exposures.

We’re Here to Help Prevent Commercial Property Exposures

Experts predict a flat to 15% increase in commercial property insurance premiums in 2025. Our team is here to help you understand the current commercial property insurance market, empowering you with risk management strategies to protect your organization. If you have more questions about your commercial property insurance coverage or the status of the market, connect with a member of our team.