The commercial insurance market began 2025 with a shift in momentum — signaling signs of softening for many lines of business and account sizes. According to The Council of Insurance Agents & Brokers’ Q1 2025 P/C Market Survey, average premium increases slowed across the board, though certain sectors remain under pressure due to escalating litigation dynamics.

Overall Premium Trends Show Signs of Relief

Premiums rose by an average of 4.2% across all account sizes in Q1 2025 — a notable 22% decrease from the 5.4% increase reported in the previous quarter. While this marks the 30th consecutive quarter of premium growth, the deceleration suggests increasing flexibility from carriers and a potential shift toward a more competitive market environment.

Middle Market Leads the Softening

The most pronounced change was seen in medium-sized accounts, where average premium increases dropped from 6.4% in Q4 2024 to 3.6% in Q1 2025 — a 42% decline. Industry respondents noted that insurers are beginning to re-engage with the middle market, with more underwriters willing to negotiate and compete. One broker from the Northwestern U.S. stated plainly, “Carriers were starting to re-engage in the middle market.”

Market Softening in Most Lines — Except Auto and Umbrella

The softening trend extended into most lines of business. Five lines even recorded premium decreases:

• Cyber
• Directors & Officers (D&O)
• Employment Practices Liability
• Terrorism
• Workers’ Compensation

This broad softening is attributed in part to increased carrier competition and a noticeable influx in underwriting capacity. For instance, D&O coverage has become more accessible thanks to a more crowded marketplace — a trend highlighted in a recent May 2025 state of the D&O market report.

Litigation Funding Fuels Pressure in High-Risk Lines

Despite these positive shifts, commercial auto and umbrella insurance remain stubbornly hard. These lines experienced the largest premium increases, with auto up 10.4% and umbrella up 9.5%. The driving force? Third-party litigation funding (TPLF).

TPLF — where outside investors finance lawsuits in exchange for a share of the settlement — continues to elevate both the frequency and severity of claims. Respondents across the industry pointed to TPLF’s impact not just on premium hikes but also on changes in policy terms, including reduced limits and tighter underwriting.

As one respondent from a large Southwestern brokerage firm put it, “Third-party litigation funding is hurting the consumer.” In response, underwriters are becoming more cautious — and in some cases, refusing to offer limits altogether for high-risk segments.

What Agents Should Watch Moving Forward

While the market shows encouraging signs of softening, especially for mid-market clients and most major lines, agents should remain vigilant. Litigation trends — particularly those tied to commercial transportation and excess liability — are shaping premium structures and availability more than ever before.

For clients in sectors affected by high-verdict litigation risk, early planning, clear communication, and proactive risk management will be essential to navigating tightening terms. Meanwhile, the softening in cyber, D&O, and EPLI could offer opportunities for clients to revisit coverage levels and pricing with a fresh perspective.

California Insurance Commissioner Ricardo Lara has announced the formation of a new Smoke Claims & Remediation Task Force within the California Department of Insurance. The initiative responds to growing concerns over inconsistent handling of smoke damage claims following recent devastating wildfires.

Addressing a Longstanding Gap in Smoke Damage Standards

For more than three decades, California lacked uniform guidelines for evaluating and settling insurance claims related to smoke damage. Commissioner Lara acknowledged the consequences: delays, confusion, and families returning to homes that may not be safe. The newly formed Task Force aims to develop science-based standards to address these challenges and improve outcomes for affected residents.

Wildfire Smoke Impacts Are Expanding

While previous wildfires in places like Santa Rosa and Paradise left lasting damage, today’s wildfire smoke reaches farther into urban areas, affecting densely populated communities. With no established statewide protocols, insurers have varied in their response, sometimes denying smoke claims altogether or requiring homeowners to clean visible damage before claims are even considered.

Recent Directives to Insurers

In March, Commissioner Lara issued a formal Bulletin mandating that insurers fully investigate and pay legitimate smoke damage claims. The California FAIR Plan, the state’s insurer of last resort, received a separate directive to follow the same standard.

Task Force Goals and Membership

The Smoke Claims & Remediation Task Force will include a range of stakeholders, including:

• Public health and environmental health professionals
• Smoke remediation specialists
• Fire safety experts
• Consumer advocates

Together, the group will recommend:

• Uniform standards for inspecting, testing, and remediating smoke-damaged properties
• Guidelines for determining the health and safety status of affected structures
• Roles for state and local agencies in enforcing the standards and mitigating fraudulent claims

Task Force members are currently being appointed, with the first meeting to follow the full announcement of participants.

Support for Impacted Consumers

Residents with questions about insurance coverage or damage claims can reach the California Department of Insurance at 800-927-4357 or visit insurance.ca.gov for live chat and email support.

A new study analyzing data from over 37 million Americans reports a link between Medicaid coverage and reduced mortality risk. The findings arrive amid congressional discussions over potential reductions to the Medicaid program, which currently serves more than 71 million low-income or disabled individuals.

Key Findings from the Study

The study, published as a working paper by the National Bureau of Economic Research, found that poor adults who gained Medicaid coverage after the Affordable Care Act (ACA) expanded eligibility were 21% less likely to die in a given year than those who remained uninsured. The analysis covered a broad demographic, including younger adults in their 20s and 30s, a group often not previously eligible for Medicaid.

The research attributes 27,000 fewer deaths since 2010 to Medicaid expansion. Approximately 29% of those whose lives were saved were younger adults. According to the authors, nearly half of the life years saved occurred within this age group.

Cost Comparison with Other Health Interventions

According to the study, the average cost to Medicaid for saving a year of life was estimated at $179,000. This figure is comparable to costs associated with other medical interventions such as cervical cancer screenings and leukemia treatments. The cost was also noted to be less than that of some public safety measures, such as vehicle safety inspections and asbestos removal.

Context and Methodology

The study’s authors used federal records to link tax data, death certificates, and Medicaid enrollment information, allowing for a comprehensive view of the program’s impact. The findings are presented as more statistically robust than prior research, which typically involved smaller sample sizes and focused on older or sicker populations.

Previous studies — such as the RAND Health Insurance Experiment and Oregon’s Medicaid lottery analysis — had shown mixed results, partly due to limited sample sizes or short follow-up periods. The new research includes a broader population and a larger data set, enabling the measurement of rare outcomes like death rates with greater accuracy.

Broader Considerations

The authors acknowledged the study’s limitations. They noted that Medicaid alone would only reduce health disparities between low- and high-income individuals by an estimated 5% to 20%, as other factors — including exposure to environmental risks and social determinants of health — also play a significant role in life expectancy.

The study did not identify specific treatments responsible for the observed reduction in mortality. However, it noted that access to preventive medications, mental health services, and treatments for common causes of death, such as drug overdose, suicide, cancer, and heart disease, may be among the contributing factors.

Conclusion

The study offers new data on the association between Medicaid coverage and mortality, highlighting changes observed after the ACA’s expansion of eligibility. It provides a cost comparison with other life-saving interventions and adds to the existing body of research on health insurance outcomes. As Congress considers changes to Medicaid funding, this study may serve as a point of reference for evaluating the program's impact.