A Split Market Is Not a Simple Market
For the first time since 2017, commercial property insurance premiums are declining. The Council of Insurance Agents and Brokers reported that commercial insurance premiums fell 1.2 percent on average in the first quarter of 2026, the first overall decrease in nearly a decade. Property insurance led the way, dropping 5.5 percent. Workers’ compensation fell 3.7 percent. After years of steady, sometimes painful, increases, there is genuine relief on the property side of the ledger.
But the headline number hides a split. While property rates ease, liability costs are moving in the opposite direction. Commercial auto increased 5.8 percent. Umbrella liability rose 4.8 percent. General liability climbed 2.6 percent. The forces driving those lines, a litigation environment that has become significantly more expensive for insurers over the past five years, are not showing any signs of slowing down.
For business owners in Seguin and across Guadalupe County, this means a renewal conversation that is more nuanced than it has been in years. Savings on one side of the policy may be real and significant. But those savings can disappear quickly if the liability side is not receiving equal attention.
Why Property Rates Are Coming Down
The commercial property market went through a prolonged hard cycle driven by natural catastrophe losses, reinsurance cost increases, and a period when insurer capacity pulled back from the market. Between 2018 and 2024, property renewals of 10 to 25 percent were common, and properties in catastrophe-exposed areas or with poor loss histories saw increases well above that range.
What has changed is competition. Capital has returned to the property market. Reinsurers have reported profitable years. New capacity has entered, particularly for accounts that are well-maintained, well-documented, and located away from the highest-hazard zones. The result is that clean accounts, meaning properties with good loss histories, updated roofs, modern electrical and plumbing systems, and locations outside flood and wildfire zones, are now seeing renewals that range from flat to a meaningful reduction.
This is a welcome development, but it comes with an important caveat. The market is not uniformly soft. Properties in catastrophe-prone locations, accounts with recent large claims, and buildings with deferred maintenance are still facing firm pricing and tighter terms. The improvement is real, but it is selective.
Why Liability Rates Keep Climbing
The liability side of the commercial insurance market is responding to a different set of forces, and the most significant one is social inflation. Social inflation refers to the rising cost of insurance claims driven by broader societal trends, including larger jury verdicts, more aggressive litigation tactics, third-party litigation funding, and an evolving legal environment that has made defendants, particularly corporate defendants, more expensive to defend and more expensive to lose against.
The numbers are striking. Research published in 2026 analyzing a large database of U.S. jury verdicts and settlements found that plaintiff win probability increased by approximately 20 to 30 percent between 2009 and 2024. Settlement propensity declined by more than 10 percent over the same period, meaning more cases are going to trial rather than settling. And verdict severity, the dollar amount of awards when plaintiffs win, more than doubled between 2020 and 2024, even after controlling for case characteristics.
This is not limited to nuclear verdicts, the nine- and ten-figure awards that make national headlines. The same research shows that social inflation is affecting moderate losses in a similar pattern. For insurers, this means the entire loss distribution is shifting upward, and that shift is being priced into liability, umbrella, and commercial auto policies across the board.
What This Means for Your Renewal
Do Not Auto-Renew
The most important thing a business owner can do in this environment is break the habit of treating a renewal notice as something to simply accept. If your property has a clean loss record and sits outside a high-hazard zone, this is a good year to have your coverage actively shopped rather than automatically renewed. The competition that has returned to the property market benefits buyers who are willing to let their agent bring it to market.
Do Not Let Property Savings Create a False Sense of Security
A 5 or 10 percent reduction on property feels good, and it should. But if your liability, umbrella, or commercial auto premiums are increasing by a similar or greater amount, the net effect on your total cost of insurance may be neutral or even negative. Any savings on the property side are worth reinvesting into a serious review of your liability and umbrella limits.
Review Your Umbrella Limits
In a litigation environment where verdict severity has more than doubled in four years, the question is not whether you need umbrella coverage. It is whether your limits are adequate. An umbrella policy that made sense three years ago may not provide sufficient protection today. The cost of increasing umbrella limits is often modest relative to the exposure it covers, and this is one area where underinsurance can be catastrophic.
Look at Commercial Auto Carefully
Commercial auto has been one of the most persistently hard-market lines for several years, driven by distracted driving, rising repair costs, and the same litigation trends affecting broader liability. If your business operates vehicles, your commercial auto renewal deserves specific attention. Driver safety programs, telematics, MVR screening, and fleet management practices all influence pricing, and the right risk management steps can meaningfully affect what you pay.
The Independent Agent Advantage in a Split Market
A split market, where some lines are softening and others are hardening, is exactly the environment where an independent agent adds the most value. A captive agent who represents one carrier can only offer that carrier’s pricing across all lines. An independent agent can place your property with the carrier offering the best rate in a competitive market and separately address your liability and umbrella coverage with the carrier that provides the best combination of price and terms for those specific lines.
At Donegan Insurance, we work with multiple commercial carriers and approach every renewal as an opportunity to re-evaluate your coverage across all lines. We do not assume that last year’s carrier is still the right fit, and we do not let a soft property market distract from the liability side of your program.
Talk to Us Before You Sign
If your commercial insurance renewal is approaching, this is a good year to have a real conversation about it. The property market is rewarding clean accounts, and the liability market is punishing businesses that have not reviewed their limits. Both of those facts create opportunities, but only if someone is paying attention to both sides of your policy at the same time.
Contact Donegan Insurance for a commercial insurance review. We will shop your property, review your liability and umbrella limits, and make sure your total program reflects both the opportunities and the risks in the current market.
Call 830-303-8300 or request a consultation online.
