Commercial lines index hints that soft market may be bottoming out

Although rates in the UK commercial lines market have continued to soften, the pace at which this is occurring has decreased substantially in Q2 2025 – offering the first hint that the soft market may be bottoming out.

These findings come from the latest edition of the Insurance Times Commercial Lines Premium Index, in association with software house Open GI.

The index aggregates billions of pounds of gross written premium (GWP) – placed by hundreds of brokers via Open GI’s insurance software – to provide a detailed look at the current state of the commercial lines market.

A 6.7% overall rate fall across commercial classes in Q2 2025 marked the third successive quarter in which year-on-year rate drops were recorded by Open GI.

This figure, however, also represented a slowing of quarterly rate decreases when compared to the 10.9% year-on-year drop seen in Q1 2025 and was the first time since rate falls began in Q4 2024 that a deceleration in the decline has been noted.

Prior to 2024’s fourth quarter, commercial line premiums saw year-on-year growth in every quarter since the index’s data began in Q2 2021.

Major lines fall

While August 2025’s index reveals that the rate of softening has slowed across the commercial insurance market at large, none of the major lines saw premium increases.

Vehicle fleet insurance saw the smallest year-on-year premium falls, with average prices dropping just 1.4% between Q2 2024 and Q2 2025. That figure will please many brokers following the Bank of England reporting in 2024 that the commercial motor liability market had a GWP of £3.4bn in 2023.

Combined liability and commercial combined products saw similarly modest rate falls, dropping 4.6% and 5.2% respectively year-on-year.

Packages (10.1%), contractors and tradesmen (10.2%) and property owners (11.6%) policies all saw rate drops of greater than 10%.

Meanwhile, specialist lines – defined as specific products covering niche market areas – saw rates decrease by 15.4% between 2024 and 2025’s second quarter, recording the largest fall of any major product area included within this exclusive index.

Brokers, however, will be reassured to see that the category ‘other’, which contains miscellaneous lines not large enough to warrant their own category, saw rates climb 3.7% over the past year.

While rate drops may be appealing to consumers, the effects of prolonged margin pressures have had brokers and insurers anxiously awaiting the end of the soft market.

Nick Giddings, director of brokers and MGAs at Open GI, explained: “It’s clear the softening market is consumer friendly, however it is a challenge for brokers across business lines – our partners are telling us it is a testing time – and rates continuing to fall isn’t what anyone was hoping for.

“However, we are seeing some recovery shoots. While overall premiums are still decreasing, they are going down at a slower rate than they were in the previous quarters, which may indicate we have already gone past the bottom of this market cycle.

“While it is unclear when markets will harden, the decrease in rate softening is an indication that this may be starting to happen and this will be welcome news to our partner brokers.”

Negative market

Given that the signs of an end to the soft market remain tentative, some sector scepticism exists about how soon rate reversals may be seen.

David Ovenden, chief underwriting officer at Axa Commercial – a firm which has experienced positive rate movements in its own motor fleet offering – explained why he feels rate decreases may continue in the medium term.

He told Insurance Times: “Late 2024 and early 2025 saw increased competition in a number of lines of business and specific segments.

“The exception was financial lines, which had seen softer market conditions throughout 2024, and motor fleet, which has continued to achieve positive rates as insurers address unfavourable results and additional claims inflation in this segment.

“The initial negative impact on rates in early 2025 has started to settle a little, as the Open GI data suggests. However, with the exception of motor fleet, we remain in a firmly negative market that we expect to continue [until] the end of 2025 and probably into 2026.

“The question of when the market will flatten or see a return to rate will be a function of a number of issues, including weather, inflation, wider economic performance and, critically, when insurers recognise their results are at or below target returns.”

Whatever the precise timing of rate reversal may turn out to be, Insurance Times and Open GI’s index suggests that the pace of softening is finally slowing – a signal that the market’s long awaited turn may now be on the horizon.