Global commercial insurance rates fell by an average of 6% in the second quarter of 2026, according to Marsh. Property and cyber cover became cheaper on average, but casualty rates rose and insurers remained selective about catastrophe-exposed buildings, hazardous operations and businesses with poor claims records. The headline price of insurance is falling, but not every company is benefiting equally.
The apparent contradiction matters because a market average can conceal very different renewal outcomes.
Marsh’s Global Insurance Market Index found that commercial property rates declined by 12% worldwide in the second quarter. Cyber rates fell by 4%, while casualty rates increased by 2%.
The figures describe average rate movements among Marsh clients, not every insurance policy in the world. Even so, they show why it is misleading to say that business insurance is simply becoming more expensive.
Insurance prices depend on the individual risk
Insurance transfers part of the financial cost of events such as fires, storms, cyberattacks and liability claims from a business to an insurer. The insurer charges a premium for accepting that risk.
Before offering cover, an insurer carries out underwriting. This is the process of estimating how likely a claim is, how large it could be and what terms would make the risk acceptable.
The calculation affects more than the premium. An insurer can reduce the amount it is willing to cover, require a larger deductible or exclude particular causes of loss. A deductible, also called an excess in some markets, is the portion of a claim that the policyholder must pay.
Capacity is another part of the decision. In insurance, capacity means the amount of risk that insurers are willing and financially able to accept. Plenty of capacity usually produces stronger competition and lower prices. Limited capacity gives buyers fewer choices.
Capacity has been abundant across much of the commercial market in 2026. Strong insurer earnings and favourable reinsurance conditions have helped. Reinsurance is insurance purchased by insurers to limit the losses they retain themselves.
However, that capital is not distributed evenly. Aon’s review of the second quarter described broadly favourable conditions for buyers, while reporting more limited capacity for US automobile and lead umbrella liability, higher-risk properties and some buildings with large natural-catastrophe exposure.
Why certain risks still face pressure
A property’s location can sharply alter an insurer’s expected loss. A warehouse exposed to flood, wildfire or severe storms presents a different calculation from a similar building in a lower-risk area.
The possible repair bill matters as much as the probability of damage. Swiss Re Institute expects property rebuilding costs to be 7% higher in the United States and 11% higher in Germany by 2027. More expensive materials, equipment and construction work increase the amount an insurer may have to pay after the same physical loss.
Business interruption can add to the claim. This cover compensates a company for specified lost income and continuing costs while insured damage prevents normal operations. Delays in obtaining machinery or rebuilding a site can extend that period.
Liability insurance faces a different problem. It covers specified claims that a business caused injury, property damage or another legally recognised loss. In the United States, larger settlements and litigation costs have kept pressure on some casualty lines.
Marsh recorded a 7% increase in US casualty rates in the second quarter, even as the global commercial index declined. Separately, Triple-I and Milliman forecast that general liability and commercial automobile would be the only major US property and casualty lines with net combined ratios above 100 for 2025.
The combined ratio compares claims and operating expenses with premiums. A result above 100 means the insurer paid out more through underwriting than it collected in premiums, before investment income. The Triple-I and Milliman figures were forecasts based on data through the third quarter of 2025, rather than final full-year results.
Cyber insurance shows how a market can remain competitive while the underlying risk becomes harder to assess. Aon reported softer cyber pricing in 2026, but said insurers remained cautious about ransomware, digital supply chains and incidents that could affect many policyholders through a shared provider.
An industry survey provides useful context, although it should not be confused with claims data. RiskScan 2026, commissioned by Munich Re US and the Insurance Information Institute, surveyed more than 1,700 people in the United States and United Kingdom. Respondents across five insurance-market groups placed cyber incidents, economic pressures and artificial intelligence among their main concerns. The survey also reported perceived gaps in flood and cyber cover.
The policy can become weaker without disappearing
A business does not need to lose all access to insurance for the problem to affect its finances.
A higher deductible leaves more of each loss with the company. A lower policy limit caps the insurer’s payment sooner. An exclusion can remove a particular event from the policy altogether. The premium may even fall while the business retains more risk.
This distinction is easy to miss when buyers compare renewal prices alone. Two policies with similar premiums can provide materially different protection.
Restricted cover can also affect other business decisions. Loans, leases and customer contracts often require specified insurance. If sufficient cover is unavailable, a company may need to provide more security, accept a larger uninsured exposure or reconsider an investment.
The insurance protection gap is the difference between total economic losses and the amount covered by insurance. Reducing cover does not remove the underlying risk. It moves more of the possible loss back to the company, its lenders or other parties.
Better information can improve a company’s position
Businesses cannot control every source of loss, but they can influence how underwriters view them.
Fire protection, flood defences, maintenance and business-continuity planning can reduce property losses. Cybersecurity controls, tested backups and clear incident-response procedures can affect a cyber insurer’s assessment. Accurate information about buildings, equipment, suppliers and previous claims allows an underwriter to distinguish a well-managed risk from a poorly documented one.
Aon reported that well-performing property risks achieved double-digit price reductions in several regions during the second quarter. By contrast, insurers applied closer scrutiny to risks with weak controls, poor claims histories or limited information.
This creates a practical divide inside a soft insurance market. Competition can lower prices for preferred businesses while data-poor or loss-prone companies receive tighter terms. The same market conditions can produce both outcomes.
Companies reviewing insurance therefore need to examine the premium, deductible, exclusions, limits and the losses that remain on their own balance sheet. A cheaper policy is useful only if it still covers the risks the business cannot afford to carry.
