- EF1-level tornadoes—featuring winds between 86 and 110 mph—touched down in Paxton and Holden, Massachusetts, part of a broader severe thunderstorm system. These events caused widespread tree damage and power outages, especially in western Connecticut, adjacent to Massachusetts.
- More than six inches of rain fell in parts of northern New Jersey over just a few hours. At least two people died, and 21 individuals were rescued from submerged vehicles. Newark airport operations were grounded, and public transit systems were severely affected. In New York City, this event marked the second-highest hourly rainfall since 1943.
- Job growth has cooled significantly. In August, the nation added just 22,000 jobs, well below expectations, and the unemployment rate rose to 4.3%—its highest level since 2021.
- A recent analysis highlights that port congestion, tariffs, and rising trade friction continue to strain supply chain operations nationwide, potentially impacting retail and industrial sectors
You’re probably familiar with the impact extreme weather events, the ongoing labor crunch, and supply chain shortages have had on commercial insurance premiums over the past few years. The headlines above are just over the past few months! Now, several other issues have emerged that are driving up rates for the foreseeable future—particularly in industries such as construction, manufacturing, and logistics.
Here are three factors impacting commercial insurance premiums right now:
- Tariff and trade policy volatility. Economic uncertainty is kryptonite for insurance companies, creating a climate in which carriers cannot confidently plan for future losses. As a result, many insurers have to reconsider writing business in certain industries and geographies, ultimately reducing competition in those markets and pushing premiums up. For condominiums and similar properties, this volatility translates into higher repair costs—materials like zinc-coated copper flashing, for example, are now four times the price of stainless steel, largely due to tariffs. These increases in materials and supply chain costs mean the true cost to repair or rebuild is far greater than in years past.
- “Nuclear” verdicts. Jury awards that exceed $10 million are becoming commonplace in liability cases involving bodily injury, trucking accidents, product recalls, Professional Malpractice, and more. Since these nuclear verdicts are being handed out in cases that historically settle for far less, insurers are planning for the possibility of extraordinary losses by increasing premiums.
- Reinsurance costs. If your current agent is struggling to remarket a renewal because of a significant rate increase or a standard carrier nonrenewal, it may be due to capacity issues. Rising reinsurance costs are reducing insurers’ appetite for risk, especially for clients with greater catastrophe exposure or those in high-risk industries such as coastal properties, condominium development, scaffolding contractors, and roofing contractors.
Each situation, building, and business is unique, and finding alternatives to ensure your building or business are fully insured is a tailored solution, not one size fits all. For more advice and learning on the subject, contact us.
If these economic pressures increase the cost of your commercial insurance policies (including Architects & Engineers Professional Liability) at renewal time, you may turn to Professional Insurance & Risk Brokerage, LLC for information on why this is happening. Our team wants to ensure you have the latest market intelligence to help educate your business during these challenging conversations
President
Professional Insurance & Risk Brokerage, L.L.C.
