Between escalating volatility and economic shifts, the commercial property insurance market is facing some intense pressures. As we head into 2026, brokers and clients alike are watching the coming months with a mix of apprehension and optimism, waiting to see what challenges and opportunities the new year will bring.
Liezle Bhasin, Senior Commercial Lines Underwriter at Unica, told IB that there’s a collection of intense dynamics at play here that are driving a rise in commercial property insurance premiums, with high-risk property zones being impacted the most.
“Climate volatility is accelerating,” she told IB. “In the summer of 2024, we saw four major catastrophes within five weeks, with insured losses over $8 billion. And wildfire activity remains high as well. In 2025, we've seen the second-worst season on record following 2023, with 17.3 million hectares burned. There are also economic pressures on property insurance, with rising property values, construction costs, and interest rates all leading to higher replacement cost estimates.”
As Bhasin explained, the impact is felt strongest in high-risk zones, such as the wildfire zones, flood zones and coastal areas. What’s more, with wildfire-prone areas, the industry is looking at premium increases, stricter underwriting and sometimes even non-renewals.
“The key takeaway here is that these pressures signal a shifting risk landscape, with a sharper focus on defining our appetite and adapting strategically,” added Bhasin.
But the human and financial toll of climate disasters is only part of the story—rising repair and labour costs are adding layers of complexity to claims and underwriting decisions.
“Inflation has been driving claims costs across all lines of insurance,” explained Bhasin. “In auto, maintenance, repair, and labour rates have climbed almost 10% over the last few years. Vehicle complexity is adding pressure, advanced safety systems and EV technology are driving higher parts and labour costs. EV collision repair costs are almost 30% higher than those for traditional vehicles, and these pressures are extending repair times.”
Property claims are also under strain, with rising material costs and labour shortages leading to longer claim durations and higher severity. What’s more, actuaries are recalibrating reserves as legacy benchmarks are no longer sufficient.
“Social inflation, tariff-driven cost spikes, and climate disasters add additional pressures,” warned Bhasin. “The industry's response has been tightening underwriting discipline, redefining risk models and building up reserve buffers to manage volatility.”
With property valuations climbing, the potential for significant losses has never been higher—meaning brokers now need to play a pivotal role in helping clients understand this complex new market.
“Accurate property valuations are critical,” Bhasin told IB. “Coverage is normally based on reconstruction costs, not market value. Professional valuations every two to three years are recommended. If a professional valuation isn’t possible, insurer-approved tools or third-party calculators can be used, factoring in current material and labour costs, local construction trends, and unique property features. Look at policy limits and coinsurance clauses to avoid significant out-of-pocket expenses, and make proactive risk reduction investments, such as fire suppression systems, flood barriers, and security upgrades, to improve insurability and potentially reduce premiums.”
Bhasin also advised considering higher deductibles and starting renewal processes early, 90 to 120 days in advance, to review valuations, negotiate terms, and explore alternate markets.
“Brokers should educate clients on market dynamics, including construction cost trends, and explain why these steps matter.”
Supply chain disruptions have further complicated claims processing, stretching timelines and inflating costs, causing worrying ripple effects.
“Adjusters face challenges estimating timelines and costs,” explained Bhasin. “Delays in sourcing building materials, auto parts, and specialized equipment lead to longer claim settlements and higher business interruption losses. Scarcity of materials and labour drives up repair and replacement costs, compounded by inflation, affecting the insurance company’s bottom line. Brokers can help clients by encouraging audits of critical assets, identifying supply chain dependencies, maintaining updated inventories and documentation, ensuring extended indemnity periods for prolonged repairs, advising on secondary supply relationships for key materials and parts, promoting preventative maintenance, and partnering with insurance companies for loss control to identify vulnerabilities and implement fixes.”
And when it comes to proactive risk mitigation, especially in high-risk zones, Bhasin emphasized a combination of physical measures and technology.
“In wildfire-prone areas, create defensible space—10 to 30 meters of clear vegetation—use fire-resistant roofing and siding, and install sprinkler systems with accessible water sources. In flood-prone areas, elevate critical equipment and electrical systems, install backflow valves and water sensors, consider flood barriers.
“Then, for coastal or storm-exposed properties, reinforce roofs and doors against wind uplift, use impact-resistant glass, and add storm shutters. Use technology such as sensors for leak detection, temperature, and smoke monitoring. Increase deductibles, combine policies across multiple carriers for multi-policy discounts, partner with insurance companies for site inspections, implement recommended upgrades promptly, and maintain a clean claims history to improve insurability and premium credits.”
Even as these pressures mount, insurers like Unica are adapting. As Bhasin told IB, Unica has expanded its appetite within seven segments: manufacturing, wholesale, offices, realty, construction, garages, and auto, and now includes monoline commercial auto. It’s this expansion that gives brokers more flexibility while simultaneously maintaining underwriting discipline and enhancing the ability to serve a broader range of businesses without compromising risk quality.
“Hopefully, brokers gain more options for well-managed risk while they have confidence in Unica’s commitment to sustainable competitive solutions,” added Bhasin.
This article was created in partnership with Unica.
