CIAB’s Q4 2025 survey recorded the first large commercial account premium decline since 2017 (-2.1%), with nine lines in retreat. AM Best projects the industry combined ratio deteriorating to 96.9% in 2026. Portfolio-level metrics don’t reflect the damage yet because commercial auto’s hard-market pricing masks softening in property, GL, and workers’ comp. Carriers running blended combined ratios will discover the deterioration in reserves, not in pricing reports.

The commercial pricing retreat is deeper and faster than headline figures suggest, with nine lines already in decline and the Q3-to-Q4 progression marking the sharpest quarterly deterioration in eight years.

As we flagged in our Q3 CIAB coverage, the 1.6% premium growth recorded that quarter was already the slowest in 32 quarters, with six lines in decline. Q4 confirmed the trajectory. The Council of Insurance Agents & Brokers’ Q4 2025 survey recorded overall premium growth of just 0.2% across all account sizes, down from 1.6% in Q3, with large commercial accounts declining 2.1%, the first premium decrease for that segment since Q4 2017. Medium accounts were flat at 0.0%. Nine lines now show premium declines: business interruption, commercial property, construction, cyber, D&O, employment practices, surety bonds, terrorism, and workers’ compensation.

Only two lines are still rising: commercial auto at 6.6% (its 58th consecutive quarter of increases) and umbrella at 4.7%. Those two lines are doing the work that nine lines used to do. The significance of this concentration should not be lost on anyone managing a commercial portfolio: the entire upward rate narrative now depends on a single structurally unprofitable line and the excess layer it feeds into.

AM Best projects the industry combined ratio will deteriorate to 96.9% in 2026, with commercial lines specifically rising to 96.3% from 95.8% in 2025 and net premium growth slowing to 4.0% from 6.1%. Three commercial lines already posted combined ratios above 100 in 2025: auto (103.5), medical professional liability (106), and other/products liability (108). Aon CEO Joe Peiser framed it directly: “There is likely going to be a window of opportunity and not a prolonged soft market because the fundamentals of our business have not changed.”

Commercial auto’s hard-market pricing is inflating blended combined ratios enough to mask softening across multiple lines, creating the same false confidence that preceded the last reserve correction cycle. The mechanism is specific and the math is visible in carrier filings.

Chubb reported a full-year 2025 P&C combined ratio of 85.7, a record result. Within that portfolio, its commercial auto combined ratio was 126.2. The 40-point gap between the blended metric and the worst-performing line is the masking effect in a single number. Chubb is not alone. AM Best found that 14 of the top 20 commercial auto writers posted combined ratios above 100 in 2024, led by Sentry (130), Chubb (126.2), and State Farm (123.6). State Farm’s 2025 results illustrate the full distortion: auto underwriting profit of roughly $5 billion, yielding a combined ratio of 93.5, masked a property combined ratio near 108. The portfolio-level recovery was entirely dependent on one segment.

The line generating that subsidy is itself structurally broken. Commercial auto liability has now posted underwriting losses for 14 consecutive years despite 58 quarters of rate increases. AM Best estimates the line is under-reserved by $4 billion to $5 billion. Conning’s 2025 analysis confirms this is severity chasing rate, not discipline: liability costs have surged more than 64% since 2015, driven by social inflation and litigation funding. Nuclear verdicts exceeding $10 million reached 135 cases in 2024, a 52% increase over 2023, totaling $31.3 billion.

The reserves are already surfacing. As we reported in January, Everest took a $1.7 billion casualty reserve charge, followed by an additional $478 million in unfavorable development in October 2025, ultimately securing a $1.2 billion adverse development reinsurance agreement against further deterioration. Allstate documented bodily injury severity increases of 52% over five years and uninsured motorist costs up 72%. Selective Insurance continued boosting prior-year reserves in commercial auto through 2025. If reserves are already proving inadequate in lines where rate increases never stopped, carriers using blended metrics to offset soft-line exposure are compounding the error.

Berkshire Hathaway’s reinsurance pullback removes the capacity cushion that delayed prior soft-market corrections, and the carriers already enforcing line-level discipline are the ones positioned to outperform through it.

On March 1, 2026, newly appointed CEO Greg Abel published his first shareholder letter and addressed the reinsurance market directly: “The reinsurance sector has attracted significant increases in available capital from both the traditional and alternative markets, which together with a more benign reinsured catastrophe loss burden in 2025 in most major regions has led to significant price declines in property reinsurance.” His forward guidance was explicit: “As long as these phases of the cycle endure, we expect to write less reinsurance premium.” Berkshire’s reinsurance premiums written declined $1.7 billion to $20.2 billion in 2025, an 8% reduction, while its insurance float grew from $171 billion to $176 billion. This is a carrier building dry powder, not one retreating from the market.

The January 1, 2026 renewals quantify the pricing environment Berkshire is refusing. Howden Re reported risk-adjusted global property-catastrophe rates declined 14.7%, the largest year-over-year reduction since 2014. Gallagher Re measured 15%. Guy Carpenter measured 12%. U.S. programs fell 10% to 20%. London market casualty reinsurance declined 16.5%. Dedicated reinsurance capital reached $660 billion, up 9% year-over-year, and the ILS market deployed a record $24.7 billion in catastrophe bond issuance. Abel identified the deeper problem beneath the property numbers: “In most casualty reinsurance segments, claims inflation continued to outpace pricing.” As we warned in our January 2026 renewal coverage, casualty reinsurance pricing was calm for the wrong reason. Insurance Insider’s analysis at the January renewals framed it precisely: the pricing reflected “a capital-driven equilibrium, not a risk-driven one,” and warned that “when capital finally retreats, pricing does not slope upward. It gaps.”

The carriers positioned for that correction are the ones enforcing discipline now. W.R. Berkley posted a 90.7% combined ratio and 21.2% return on equity in 2025 while growing selectively, with management stating they expect “margins available to us will continue to be excellent, with select areas of opportunity persisting in 2026.” Beazley explicitly chose profitability over volume, with renewal rates declining 4% and growth running at the low end of guidance. AIG maintained attachment point discipline at the January renewals despite securing 15%+ rate decreases on property-catastrophe, with CEO Peter Zaffino noting: “Once you give it up, you don’t get it back.” The carriers still chasing premium volume in a market where nine lines are softening, and casualty reserves are already proving inadequate, are the ones most exposed when the capital-driven equilibrium breaks.

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