P&C Report: 2025 Q2 Outlook

INTRODUCTION

Demand for Property & Casualty (P&C) Insurance from the non-admitted marketplace continues to accelerate. In 2024, Excess & Surplus (E&S) lines generated over $81 billion in premiums, marking a 12% increase year-over-year. That outpaces the broader U.S. P&C market, which grew by 8% last year, according to S&P Global Market Intelligence. As more risks fall outside the appetite of admitted carriers, brokers and agents are increasingly turning to the E&S space to deliver creative, customized solutions for their clients.

As we commence Q2, we are closely monitoring the start of wind and storm seasons, wildfire activity, rate movements across all market segments, and key underwriting developments such as increased use of exclusions and stricter risk mitigation expectations.

Despite some of the volatility, today’s market offers strategic opportunities for brokers and agents to distinguish themselves through greater reliance on the emerging product offerings of the E&S sector.

Wind season approaching fast

The North Atlantic Hurricane Season begins June 1. Researchers at Colorado State University, considered among many as the preeminent source and historically most accurate, are predicting a more active-than-average hurricane season and estimate there will be 17 named storms, 9 of which will become hurricanes. While major hurricanes typically do not strike the U.S. until August or later, an early storm could increase Property rates by this summer.

Despite 18 named storms and five major hurricanes in 2024, Property markets have seen a wave of capital investment. This trend is fueled by high rates, favorable terms for carriers, and expanded exposure appetites. The result: more stable or even declining rates in many non-CAT regions.

At the same time, convective storms—tornadoes, hail, and wind-driven rain—are increasing in both frequency and severity. In March 2024, 100 tornadoes tore through 14 states, including several EF-4 events outside the traditional tornado alley. In January of this year, strong winds reached nearly 100 mph from Alaska to West Texas. These events show that wind risk is now a year-round, nationwide concern.

Southern California wildfires

The January 2025 wildfires in southern California caused an estimated $30 billion in losses—the largest catastrophic (CAT) wildfire event to date.

While it is still too early to predict the exact impact on the insurance industry, we have learned at least one of the key domestic high-value markets will not return to California. We expect carriers to become even more selective in the types of risks they are willing to insure, limiting coverages, and changing conditions. The California FAIR Plan will continue to write a large portion of risks in the state.

These wildfires also triggered secondary claims—most notably, smoke damage and business interruption. Legal battles over the legitimacy of such claims are likely, particularly given California’s active plaintiff’s bar.

Liability trends and challenging sectors

AM Best recently reported that the U.S. P&C industry reversed a $21.3 billion underwriting loss in 2023 to post a $22.9 billion gain in 2024, with a combined ratio improving to 96.6%.

Still, Liability market conditions vary widely.

• Soft Markets: Directors & Officers, Management Liability, and Cyber continue to see rate decreases as new capital boosts capacity.
• Hard Markets: Elder Care, Youth Care, and Special Needs coverage remain constrained due to heightened exposure to abuse and neglect claims—even when unfounded.
• Auto & Excess Umbrella: High-limit placements (e.g., $10M) increasingly require participation from five or more carriers, up from two a few years ago.
• Habitational & Liquor Liability: Sub-limits and exclusions (e.g., Assault & Battery, Firearms) are becoming common in these spaces, especially in high-risk jurisdictions.

A brief note about inflation

The long-term effects of newly imposed U.S. tariffs remain unclear but will likely contribute to rising prices—especially for building materials. Inflation could impact property valuations, reconstruction costs, and professional coverage for contractors and engineers. Burns & Wilcox will continue to track tariff impacts closely in the weeks and months ahead.

RATES

Rates have moderated in many P&C Insurance sectors given the added capital from new and existing carriers. Insureds in non-CAT zones with clean loss histories may even see rate reductions. However, markets like Commercial Auto, Habitational, and Liquor Liability remain challenged, with continued upward pressure on rates. Additionally, a single large CAT weather event could immediately shift the Property market back into harder territory—particularly during storm season.

CAPACITY 

Overall capacity remains strong with few major restrictions. Even so, reaching desired coverage levels—particularly for higher-value properties—often requires participation from multiple carriers. The non-admitted market is especially helpful for hard-to-place risks. Burns & Wilcox maintains broad access to global solutions across sectors, even for complex or loss-heavy accounts.

TERMS & CONDITIONS

While the wordings of most policy terms and conditions have remained primarily consistent over time, exclusions and deductibles are increasing. The most common exclusions are Assault & Battery and Firearms, especially in the Hospitality and Habitational sectors.

Brokers and agents should also confirm retro dates for their clients, where applicable, and confirm that terms and conditions do not prevent insureds from securing desired coverage. As always, the devil is in the details, so understanding all terms and conditions is critical before purchasing a policy.

Contributor: Paul G. Smith, Corporate Senior Vice President, H.W. Kaufman Group, New York, NY

FORECASTS BY LINE OF BUSINESS

During the Burns & Wilcox P&C Market Outlook: Q2 2025 webinar hosted on April 3, 2025, our industry-leading subject matter experts delivered valuable insights into the evolving insurance landscape.

Click here to view the recording.

In the following, our experts delve deeper into specific sectors within P&C, explore trends, and share outlooks for the year.

Personal Insurance:

The increased frequency and severity of CAT weather events continue to have a profound impact on the Personal Insurance market, and we expect this trend to persist.

Convective storm activity, which includes heavy rainfall, strong winds, hail, and tornadoes, is on the rise. Meteorologists reported nearly 100 tornadoes in the first week of April across the Plains, Midwest, and South. Severe weather in early April also triggered widespread flooding, dumping historic amounts of rainfall in several communities outside of traditional flood zones. Flooding is not covered under most standard Homeowners Insurance policies, so as flooding risks continue, securing Flood coverage is becoming increasingly important.

Wildfire risks also remain elevated across the country, with communities once considered safe now in danger. Researchers estimate 115 million people—more than a third of the U.S. population—reside in areas prone to wildfires. The historic wildfires in southern California earlier this year catalyzed a broader shift in how fire risk is being evaluated, and carriers are further limiting wildfire coverage.

As a result, some markets are reducing Residential Property coverage options. Additionally, there is an increasing prevalence of wind and hail deductibles, roof depreciation schedules and other exclusions. Many carriers are implementing dynamic pricing models, often with premiums adjusted based on real-time data regarding structures and risk scores, especially in volatile zones.

In this shifting environment, “home hardening” is becoming increasingly mandatory to help mitigate risks. Homeowners seeking favorable coverage terms are increasingly required to invest in measures such as defensible space, roof upgrades, fire-resistant materials, impact-resistant doors and windows, and automatic water shutoff devices. To further assist homeowners, Burns & Wilcox has partnered with Wildfire Defense Systems to provide a range of wildfire mitigation and loss prevention services to policyholders in 12 states.

Despite the continued threat of CAT events, the market remains fluid. Rates are beginning to stabilize or even decline in some non-CAT areas. Solutions are available; however, insureds are facing stricter underwriting requirements, including inspections, premium increases, and tailored coverage/limits.

Contributor: Pamela Alphabet, Associate Vice President, Regional Practice Group Leader, Personal Insurance, Burns & Wilcox, Scottsdale, AZ

Commercial Insurance:

Conditions in Commercial Insurance vary widely depending on the class of business and geographic location. Preferred risks with clean histories are seeing rate and deductible reductions. However, coverage remains tight for water damage, wind/hail, and new ventures without loss data. Other challenges include:

• Assault & Battery (A&B): Sub-limits or outright exclusions for A&B are now standard across several industries, particularly in Hospitality, Habitational, and Liquor-related businesses. Many policies also include language excluding incidents involving firearms.
• Auto and Excess Auto: One of the hardest markets within Commercial. Large jury verdicts, rising repair costs, and aggressive plaintiff advertising continue to drive loss trends. Excess placements are particularly difficult, with multiple layers often needed to build limit towers that were previously achievable with just one or two carriers. Burns & Wilcox has a dedicated Transportation Practice Group to assist with hard-to-place risks in this sector.
• Habitational: Coverage for apartments, condos, and other multi-family properties remains limited. Underwriters are increasingly wary of fire suppression deficiencies, aging buildings, and social claims exposures like Sexual Abuse and Molestation or A&B. Exclusions for these exposures are becoming commonplace.
• Liquor Liability: This segment remains highly distressed, especially in litigious jurisdictions. Many carriers are now placing defense costs inside policy limits, capping available coverage to under $1 million. Excess coverage is scarce, and underwriting is heavily influenced by past claims and venue operations.
• Sexual Abuse and Molestation: For any business serving vulnerable populations—such as youth organizations, elder care facilities, or housing for individuals with special needs—underwriters are implementing higher deductibles, tighter underwriting questionnaires, and, increasingly, outright exclusions.

Despite these challenges, some carriers are returning to the market for better-performing risks. In today’s Commercial landscape, flexibility, transparency, and speed are key. While the market is stabilizing in some respects, expertise is more essential than ever to navigate the layered underwriting and specialized risk requirements now in play.

Contributor: Connor Farquharson, Manager, Commercial Insurance, Burns & Wilcox, Dallas/Fort Worth, TX

Professional Liability:

Professional Liability remains one of the most competitive segments in the P&C space—and that trend is expected to hold steady throughout 2025. New carriers continue to enter the market with fresh capacity and broad risk appetites, driving down rates and expanding coverage options across multiple lines.

Rate reductions are now common in Errors & Omissions (E&O), Management Liability, Cyber, and Miscellaneous Professional Liability. Many insureds are also seeing broader policy forms and enhanced terms, making this an opportune time for them to secure favorable coverage.

That said, not all policies are created equal. As competition increases, the temptation to focus solely on price can lead to overlooked exclusions or limitations. Careful evaluation of policy language remains essential, and brokers should continue to prioritize educating clients on the importance of comprehensive coverage over low-cost options.

Key Professional Liability trends include:

• Cyber: Stabilizing rates are now the norm for accounts that demonstrate strong cyber hygiene—such as the use of multi-factor authentication, endpoint detection tools, and regular employee training. Accounts with poor controls or recent cyber events still face steep pricing or declinations.
• Directors & Officers (D&O): Public company D&O continues to see rate compression, while the private and nonprofit segments are experiencing more moderate and stable pricing. Underwriting focus is shifting toward industry class and organizational governance.
• E&O: While the overall market is softening, technology and healthcare accounts remain under close scrutiny. Underwriters are paying particular attention to service descriptions, contract language, and claims-made triggers to assess potential exposure.

In this environment, brokers can offer real value by helping clients navigate coverage nuances and ensuring that terms align with actual risk.

Contributor: Matt Baxter, Director, Professional Liability, Burns & Wilcox Brokerage, Atlanta, GA

Environmental Insurance:

The second quarter of 2025 remains in a hard market, with no signs of softening through year-end. Excess Liability capacity continues to be a challenge, especially within Auto. Many Excess markets are further tightening their capacity, reducing available limits, and, in some cases, requiring higher attachment points.

Regarding Environmental Impairment Liability (EIL), also known as Site Pollution Liability Insurance, the increase in environmental claims, especially in high-profile cases, has also continued in 2025. Examples include lawsuits against oil companies for spills, manufacturers for toxic contamination, and developers for land degradation. The outcome of these claims can range from large settlements to massive financial penalties, significantly affecting an organization’s financial stability and reputation.

As a result, EIL is more critical than ever, and demand for this coverage is growing. In 2025, while policy terms may be reduced, capacity is available for both sudden and gradual environmental liabilities, including pollution events, contaminated land, and long-term environmental damage.

For companies in high-risk sectors such as manufacturing, energy, mining, and real estate development, securing robust EIL coverage is essential to mitigating financial exposure. Partnering with an experienced environmental wholesale specialist is critical to navigating the complexities of these types of risk.

Contributor: Beth Linton, Vice President, Environmental Underwriting Solutions (EUS), a division of Burns & Wilcox, Atlanta, GA

Transportation Insurance:

The Transportation sector in Q2 continues to face challenges and opportunities. Understanding these nuances is essential to strategically positioning the insured.

Potential tariffs and evolving freight trends in commercial trucking could lead to increased costs, reduced freight volumes, and possible supply disruptions—affecting both trucking companies and consumers. We are closely monitoring this uncertainty, which generally impacts commercial trucking, while also focusing on business auto exposures such as contractors and not-for-hire operations.

Rate increases remain a key factor, along with limited capacity and stricter terms and conditions, especially for large fleets and those with poor loss histories. Social inflation, rising claim costs, and driver shortages drive these trends.

Telematics remains a hot topic in the transportation industry. These systems, which track driving behavior and vehicle performance to improve road safety, are frequently requested by E&S carriers—some even requiring their use. The Burns & Wilcox Transportation Practice Group encourages the use of telematics, which often results in better outcomes for insureds. Additionally, the Practice Group offers deep expertise and access to exclusive solutions, including global markets.

Contributor: Monica Cantu, Associate Managing Director, Burns & Wilcox, San Antonio, TX

LONDON MARKET UPDATE

Overall, the London market is navigating successfully a complex landscape marked by geopolitical uncertainties, financial challenges, regulatory changes, technological advancements, and evolving market dynamics. Lloyd’s 2024 results are now confirmed showing strong profits with a CoR of 87%.

Our update this quarter is a tale of two halves, Property down and Excess Casualty up.

Property:

Market conditions softened quicker than anticipated in Q1, predominantly reacting to domestic and alternative markets widening terms and offering rate relief to capture a greater market share.

Currently, pricing adequacy is at a long-term high resulting in greater capacity availability; however, many London markets remain cautious with risk appetite and the reduction in rate. Weather events in recent years, political challenges, and the recent California wildfires are reminders of the perils that have significantly impacted profitability.

As a result, markets are looking at technology solutions to analyze further and protect all aspects of their portfolios. There is a continued focus on technology throughout the Lloyd’s market to increase the ease of transacting business with London and on how best to navigate and manage the softening market trend with a greater analytical focus. Digital binding solutions, exposure analytics, and event response are all high on the agenda. As the market transitions, London needs to ensure sustainable and ongoing profitability, which is only possible with ongoing investment.

Lloyd’s ability to be nimble in times of uncertainty should be a key focus within the business. The array of products available, as well as the adaptability of these products, will lead to greater competitive advantage during the softening cycle.

Contributor: Kerry Hall, Director, Commercial, H.W. Kaufman Group London

Excess Casualty:

As rates continue to increase in the U.S. and domestic markets cut back capacity, particularly in more challenging sectors such as Real Estate and Transportation, more clients are accessing the London and Bermuda markets. As a result, the international market is becoming increasingly crucial for Excess Liability.

The Excess market continues to be challenged by the adverse development of their historical books, nuclear verdicts, and social inflation. London and Bermuda rate increases remain consistent at mid to high single digits, with poor-performing risks seeing much higher increases with potential cutting back in capacity.

We expect to see small lines of circa $5M of strategically placed capacity deployed lower down towers with ventilated additional capacity higher up placements. The focus of the London market will be filling in gaps in tough complex placements and providing creative loss-sensitive swing and Alternative Risk Transfer solutions, particularly in the Transportation space. These provide longer-term stable solutions to manage increasing deductible and self-insured retention levels.

While rates have increased, very few markets have been exiting, providing stability to clients. That said, a number of markets such as Scor, Starr, and Everest have repatriated underwriting authority back to the U.S. New entrants, mainly MGAs, have added to the increased presence. In Bermuda, there are now 21 markets writing Excess Casualty business, with more predicted to follow in late 2025. Like London, the new capacity has focused on filling in tower gaps.

Clients globally continue to benefit from the stability and consistency of the London and Bermuda markets.

Contributor: Declan Durkan, Managing Director, Non-Marine, H.W. Kaufman Group London

CONCLUSION

The E&S market continues to offer flexibility that comes with freedom of rate and form. Because of this, brokers and agents may want to consider E&S policies for clients who have been previously covered in the traditional market. This option may provide coverage that is not available elsewhere, more favorable rates, or tailored terms that best cover the underlying exposure.

The E&S market can also offer customizable solutions, such as wind and wildfire deductible buybacks, Earthquake coverage, Personal Article Floaters, and more. Burns & Wilcox works with its retail partners to understand their needs while providing the most creative options that admitted markets generally cannot offer.

Insureds can help themselves by addressing the home hardening trends through active investment in risk mitigation strategies. Hard Commercial markets in areas such as A&B, Auto, Habitational, and Liquor Liability will continue while other markets like D&O have softened.

Brokers and agents can best help clients secure the coverage they need through reliance on the expertise of Burns & Wilcox, which provides creative solutions in the E&S marketplace. This is best accomplished when carrier and underwriters’ expectations, such as those listed below, are known in advance.

• Provide full details on risk mitigation strategies in use, such as leak detection systems.
• Submit complete submissions with details that answer the question, “Why is this risk coming into the E&S space?”
• Recognize the impact of technology used by carriers and other third parties. This includes access to satellite imagery, which can identify poorly maintained property, crime scoring, and more.

As always, Burns & Wilcox can help brokers and agents find solutions for hard-to-place risks given our experience, growing line of products, investments in big data and industry connections. We are leaning into advanced decision-making tools to help manage evolving risks in a significant way. Finally, Burns & Wilcox helps identify policy options, confirming coverages, exclusions, sublimits, and other important nuances that are often overlooked.

Contributor: Paul G. Smith, Corporate Senior Vice President, H.W. Kaufman Group, New York, NY

Disclaimer: The above information has been prepared solely for the purpose of sharing general information regarding insurance and business practice management issues. These are just our opinions and are not intended to constitute legal advice or a determination on issues of coverage.