The insurance market for real estate continues to soften in what brokers describe as a rare window of opportunity for buyers, though liability lines remain a stubborn exception.
Lockton’s February 2026 market update pointed to increased competition among insurers, with conditions in property and hospitality lines generally favorable and further softening expected through the summer.
Excess reinsurance capacity for catastrophe-exposed property and a relatively benign 2025 Atlantic hurricane season are driving favorable primary insurance pricing. Property rates for nonhabitational commercial real estate assets are down 5% to 10% at renewal on single-insurer placements, with larger decreases on shared and layered structures.
The declines mark a sharp reversal from the hard market's peak. CBIZ data showed that Q1 2023 saw average commercial property premium increases of 20.4% – the first time in two decades the segment had experienced average rate hikes above 20%.
The hard market cycle that began in 2018 lasted roughly six years, well above the three-to-four-year average.
The scale of the market underscores what is at stake. The global commercial property insurance market at $378.18 billion in 2025, projecting it to reach $589.74 billion by 2029.
In the US alone, Fitch Ratings reported that policyholders' surplus hit $1.2 trillion as of September 2025, up 24% over three years — capital that is now chasing underwriting opportunities and compressing pricing.
Commercial office space remains under pressure, with vacancy rates rising quarter over quarter since 2021. Trade organization NAIOP forecasts demand for office space to decline through 2027.
Habitational property capacity is abundant, with rates on wood-frame construction down 5% to 15% at renewal. On the casualty side, however, insurers are seeking rate increases, higher retentions, and tighter terms, and most retail insurers have exited the multifamily space.
In January 2026, President Trump issued an executive order to limit institutional ownership of single-family homes. Lockton said it is monitoring how the order may influence the risk landscape.
Hospitality property rates are bottoming out, while casualty remains difficult as underwriters weigh sexual misconduct liability and crime scores across hotel portfolios. The Federal Reserve Bank of Atlanta's index shows hospitality conditions have steadily declined since 2021.
Umbrella and excess capacity has tightened, with insurers imposing exclusions for assault and battery, mold, Legionella, and emerging PFAS-related claims.
Social inflation is compounding the pressure – the American Tort Reform Association estimated that legal services providers spent $2.5 billion on 26.9 million advertisements in 2024, 39% more than in 2020.
Cyber insurance conditions remain competitive, though Lockton noted that standard policies may not adequately cover real estate companies' complex ownership structures involving joint ventures and fractional investment.
WTW's Insurance Marketplace Realities 2026 report characterized nearly every commercial line aside from excess casualty as being in soft-market territory.
Industrial properties are seeing growth, particularly in data centers. Synergy Research Group projects that by 2030, 61% of all data center capacity will come from hyperscalers, up from 44% today.
