Commercial lines rates fall by 11.7% as market softening reasserts itself

Softening rates in the commercial insurance market intensified substantially in the third quarter of 2025, with rate reductions accelerating to a year-on-year decrease of 11.7%, putting an end to speculations that the soft market cycle may have begun to bottom out.

This is according to the latest edition of the Insurance Times Commercial Lines Premium Index, in association with software house Open GI, which aggregates billions of pounds of gross written premium (GWP) placed by hundreds of brokers via Open GI’s insurance software, providing an objective view of pricing trends affecting the UK commercial lines sector.

The latest index data showed that the commercial lines market experienced a double digit rate reduction of 11.7% between Q3 2024 and Q3 2025, representing the largest fall in the last three years, suggesting that competitive pricing pressures remain a dominant force in the market.

The reinvigoration of rate reductions comes after a period where the market was showing signs of stabilising. Indeed, last quarter this index recorded a 6.8% overall rate fall, which at the time was a notable deceleration from the 11% drop seen in Q1 2025, offering a glimmer of hope that the soft market may have been bottoming out.

For brokers and insurers, these figures suggest that the trading environment in commercial lines remains challenging.

Nick Giddings, director of brokers and MGAs at Open GI, explained: “It’s clear the softening market is consumer friendly, however it is a challenge for brokers across business lines – our partners are telling us it is a testing time – and rates continuing to fall isn’t what anyone was hoping for.”

Combined liability drives falls

While the overall rate drops presented in the most recent data revealed the persistence of the softening trend across the market, a closer examination of individual lines found that certain products have contributed more to the aggregate fall than others.

Combined liability saw the biggest pricing fall of any major commercial lines product, dropping by a drastic 20% between the most recent quarter and the same period one year ago.

Last quarter, combined liability recorded a year-on-year rate drop of just 4.6% – the third least among major lines – meaning its rapid change in fortunes is comfortably the most severe of all the commercial lines products included in this index.

Rates for packages – which consist of multiple coverage types bundled into a single policy – fell by a similarly dramatic 16.3% between periods, while specialist lines – defined as specific products covering niche market areas – saw prices fall by 12.2% in the same reporting period.

Property owners (-10.5%), contractors and tradesmen (-10.4%) and commercial combined (-7.7%) likewise all saw substantial reductions in pricing over the year.

Fleet insurance experienced the smallest change in premiums, dropping by just 5.7% between periods. This line saw a similarly small yearly drop of just 1.4% in the previous quarter, cementing it as the line most resistant to softening.

Insurers and brokers alike, however, will be keen to see a stabilisation of pricing for fleet cover, given the additional margin pressures that sustained rate falls introduce.

One notable change from the last quarter’s results came in the ‘other’ category – a miscellaneous collection of lines not large enough to warrant their own category – which this quarter saw aggregate rates fall by 7.4% year-on-year.

That figure stands in contrast to Q2 2025, when the category was the sole group to see rate increases and premiums climbed by 3.7% year-on-year.

Given the severity of the renewed plunge in commercial lines rates, much of the optimism around a potential cooling of the soft market has dissipated, with many industry participants now forecasting that market softening may continue over the next year – and possibly even beyond.

Giddings added: “Despite the promising signs we saw in the second quarter of 2025, we can see that in the third quarter of the year the market is still flattening.

“While it is challenging to predict what will happen next, market indications and broker sentiment suggest that nobody is expecting a bounce back in rates until well into 2026, with all eyes on the summer.”