Through the first half of 2026, commercial property, directors and officers (D&O) liability, cyber, and workers compensation insurance premiums have been less expensive than buyers have seen in nearly a decade. Many factors have contributed to this softening in the property and casualty insurance market.
One reason is that insurers are generating combined ratios in the mid-80s, meaning they are spending roughly 85 cents in claims and expenses for every dollar earned. The underwriting profit is directly attributable to reduced losses in commercial property and workers compensation, while premium reductions in D&O and cyber have been generated by fierce carrier competition. Other factors include recent state-level tort reforms and bullish investment income. Collectively, these components have offset the pressure of persistent economic inflation on claims costs.
Another factor helping to keep rates down is the increased use of more disciplined, tech-driven risk selection. Advancements in econometric and actuarial modeling are providing risk managers with useful data more quickly to help them better navigate a volatile risk landscape. “Risks emerge faster now—the data exists to anticipate them,” said Manny Padilla, vice president of risk management and insurance at MacAndrews & Forbes, a New York-based holding company and 2026 RIMS president. “We can analyze elements [of risks] today that we previously ignored because we only received the data years after the event.”
These advances mean that modern risk professionals have the means to pursue and prioritize long-term balance sheet protection. Rather than simply securing the cheapest premiums by transferring insured risks from one carrier to another, many risk professionals are focusing on building program resilience, and working with brokers to assemble a robust risk financing platform that involves specialty reinsurance, captive insurance structures, parametric insurance and other alternative risk solutions.
In previous soft markets, risk professionals generally redeployed soft market premium savings into more troubled lines. Increasingly, this is no longer the only strategy they are employing. “Risk management is a long-term strategic program, not a scramble for annual results,” Padilla said. “We don’t focus on premium fluctuations. Our goal is to identify our risk profile, taking actions to avoid and mitigate loss—to succeed by strategic design, not merely by accident.”
Moving Beyond Policy Renewal
Modern risk professionals approach risk management as a continuous, ongoing process, not a transactional, once-a-year insurance purchasing event. In this continuous cycle, insurance brokers serve as a crucial ally, helping risk professionals proactively craft programs that anticipate and respond to potential losses long before they occur.
By leveraging advanced actuarial and macroeconomic models, brokers can precisely align a client’s evolving risk profile with a variety of sophisticated risk financing options. This capability ensures premium savings are invested in the most effective vehicles, whether through traditional insurance or alternative risk transfer solutions.
“We approach our clients from the perspective of, ‘Let's set aside what is going on in the market, whether it is hard or soft—forget that,’” said Jay Sampson, executive managing director of Brown & Brown’s risk optimization group. “What we care about is how best to align the way a company goes about financing risk with its true risk appetite. Those two things are often not well-aligned.”
Finding this alignment requires a deeper look at the math behind risk financing, specifically regarding deductibles and self-insured retentions. By balancing upfront premium savings against the increased volatility of retained risk, organizations can confidently restructure their programs. However, buyers often miscalculate the tradeoff. “Most people just look at one half of the equation and say, ‘I will save this amount of premium by taking my deductible from one to five.’ They forget the other half. You are saving that premium, but you are taking on much more risk,” Sampson said.
Long-term stability with a carrier is one way to insulate the organization from that sudden exposure. For example, Kristen Peed, chief risk officer at HR technology platform Sequoia, refuses to move primary, highly critical insurance coverage for a quick financial discount during a soft market. She believes organizations should leverage a strong loss history to have an open, transparent conversation with an existing carrier.
“You should not dump a trusted partner over a few thousand dollars, because the market cycle will swing the other way before you can turn your head,” Peed said. “Long-term stability is the ultimate goal.”
Instead of momentary savings, a soft market can offer the opportunity to balance deductibles with risk. Organizations also can leverage premium savings to offset volatility in commercial auto, umbrella and excess casualty lines, which have seen price increases despite overall market softening. Options include increasing deductibles for these lines, buying additional excess tranches in casualty towers, funding alternative risk transfer solutions like single-parent captives, and directing capital into operational risk control tools like telematics and driver safety programs.
Optimizing coverage terms, conditions and limits is another option in a soft market. “As pricing gets pressured downward, it creates an opportunity to increase policy limits where they are truly warranted,” Peed said. “We are a growing company and recently started another business, so we looked at expanding our cyber coverage precisely because rates were declining while our exposures were expanding. Having a deep history with a primary carrier who knows you are doing the right things internally helps narrow what we would have normally spent.”
Many insurers and brokers encourage similar strategies. “Today’s market is an opportunity to clean up existing programs with carriers,” said Brian Wanat, CEO of commercial risk North America at Aon. “Some [organizations] are using the savings to buy more limits, while others are looking at alternative structures like parametrics, structured deals and captives. It is no longer just an insurance discussion—it is a risk discussion first and foremost.”
A soft market naturally provides the financial means to explore such risk financing alternatives, as well as internal risk mitigation and loss prevention. “Ultimately, the risk management pieces have to be there,” said Adam Adamson, casualty team lead for the Upper Midwest at Marsh McLennan Agency. “While additional limits can be important, committing appropriate funds to active risk mitigation is crucial.”
Organizations can also consider putting premium savings into alternative risk financing solutions like captives as they are specifically designed to withstand market cycles. “A captive serves as a long-term strategy to regain risk control and secure direct access to reinsurance," Adamson said. "Yet, the benefits are not purely long-term. In the short term, a captive allows companies to absorb volatile risk layers, particularly in commercial auto.”
A soft market is the optimal time to establish these alternative frameworks. “Many times, people wait for a hard market to start a captive, but that is the worst time because you are under immense operational pressure and just scrambling for a quick solution,” Peed said. “A soft market is a perfect time to start a captive because organizations are flush with capital.”
Many options are now more viable due to the analytical depth technology is increasingly facilitating. “The approach is much more data-driven and cerebral, which is a good thing because it makes the entire program more efficient,” Wanat said. He noted there is less of the “cocktail napkin” approach of risk managers asking, “What is my competitor of the same size in the same industry doing across the street?”
“Instead, clients are prioritizing experience, analytics, claims performance, long-term partnerships and financial stability,” he said. “It is far more analytical now, driven by the thought of how the board of directors is going to look at the program.”
Treading Softly
However, experts warn that risk managers should not get too comfortable with lower premiums in commercial property, D&O, cyber and workers compensation policies. According to AM Best analysts David Blades and Christopher Graham, while market softening is widespread, underlying volatility raises serious questions about how long the depressed rates can actually last.
Blades, the rating agency’s associate director, pointed to the workers compensation line as a prime example of this fragile stability. While consistent downward pressure on pricing has been driven by a long track record of marketplace profitability, the falling rates are now actively shrinking profit margins. Compounding the issue, the prior-year loss reserve developments that historically boosted current calendar-year results are beginning to dissipate.
“While most states continue to face downward rate pressure, outliers like California are already requesting workers comp rate increases of 9% to 10%, suggesting some regions may soon have to pump the brakes on soft pricing,” Blades said.
Graham, the firm’s senior industry analyst, painted a similar picture of the cyber market. While the line continues to attract underwriting capital due to recent profitability, he noted that the resulting influx of competition is aggressively driving down pricing—even as claims rise.
“The cyber market recorded its highest loss ratio since the pandemic-disrupted coverage years of 2020 and 2021, when a surge in remote working expanded access for hackers and a wave of major ransomware attacks drove prices up considerably,” Graham said. “While current market competition has brought rates down, this softening has not yet erased all of the substantial price increases established during that peak period. If the market experiences another consecutive year of rising loss ratios, the sustainability of this downward pricing trend will face significant pressure.”
Soft pricing in the D&O market appears to have more staying power. According to Blades, the D&O market experienced an acute period of considerable renewal price increases starting in the second quarter of 2020 and lasting through the end of 2021. “The sharp upward movement finally ended a long downward rate trend, reaching a tipping point where companies had to reevaluate their coverage due to the severity of the average hikes,” he said.
Today, the higher renewal rates and improved policy terms established during that peak time successfully attracted a significant amount of new underwriting capacity. “Because the strong rates made the sector highly lucrative, insurers looking to expand their market share rushed into the space, ultimately fostering the more competitive pricing environment observed throughout 2024 and 2025 to the present time,” he said.
In similar fashion, the commercial property insurance marketplace rebounded into a softer environment since its historical corrections nearly a decade ago. While the market was notably soft in 2017 and 2018, it faced a series of highly active catastrophe years before hitting a turning point. “Following a hard reinsurance market that aggressively pushed primary insurers on both pricing and tighter terms, primary carriers responded by executing disciplined, aggressive pricing strategies,” Blades said.
The higher premiums delivered strong financial performance and underwriting results. This success was largely supported by the absence of major landfall hurricanes, which offset the cost of the January 2025 Los Angeles wildfires. Ultimately, the highly profitable underwriting returns are now attracting substantial new capacity back into the commercial property market, signaling the possibility of higher pricing ahead.
Whether premiums rise or fall, the threat of prolonged hard or soft markets appears to be over. “There is much greater granular data and much better technology, meaning risk managers can pivot more quickly when they see a [risk] trend developing,” Blades said. “They can address it faster because their predictive models are getting better; those are the types of tools at their disposal now.”
More Risks, Not Fewer
Today’s risk landscape presents unique challenges for risk professionals who now have to consider the sudden rise of artificial intelligence alongside traditional disruptions like geopolitical volatility, mergers and acquisitions, supply chain failures, and geographic expansions. “All of these have had a ripple effect on earnings, cash flow and access to capital,” said Vince Gaffigan, market strategy and engagement leader at Lockton. “Should you focus on just renewing the program or rethink the entirety of it, if you have the financial wherewithal? Redo the analytics and start considering things like the aggregation of risk or multi-peril coverage.”
Past market cycles should serve as a prologue for future strategy. “Stepping back over the last five years, ask yourself what has changed, what am I buying, how am I buying it, and should I even be buying it?” he said. The answers will guide the repositioning of the risk financing program. “This is a market presenting an opportunity to position yourself for the next change in the market cycle. The smart buyers seize that opportunity to do things differently.”
Managing internal executive expectations during this analytical shift is just as critical as restructuring the coverage itself. “I don’t look at a soft market as a time to go to the CFO and brag about how much money I saved the company, because when the cycle inevitably flips and pricing goes up, you will be measured by the same standard," Peed said. “You have to be incredibly cautious regarding how you message a market cycle to internal leadership.”
While many risk managers are certainly enjoying the soft market and the premium relief it brings, they are not simply rushing to the lowest-cost providers. Instead, they are making smart, highly analytical decisions and deploying the savings intelligently to enforce proper corporate hygiene. This stands in sharp contrast to past soft markets, “where, for example, on a big property deal, the buyer might accept incongruent terms and conditions just to save money,” Wanat said. Now, he added, eliminating those mismatches is a fundamental requirement.
Ultimately, the integration of data and strategy has helped to elevate the role of the risk professional within corporate governance. In today's environment, corporate risk has never been greater, more volatile or more important to manage. As a result, more risk managers now have seat at the table with the C-suite and the board of directors.
“Board directors are now engaging with risk managers in comprehensive, cerebral discussions across all aspects of risk, driving advanced planning and closer collaboration,” Wanat said. “That is always a good thing.”