Softening market sees commercial premiums drop in all but one UK region

The UK commercial lines market continues to soften, with average premiums in the first quarter of 2025 seeing an 11% decrease compared to the same period last year, with all regions except the south west experiencing price drops.

This is according to the inaugural Insurance Times Commercial Lines Premium Index, in association with software house Open GI.

The index, published exclusively by Insurance Times, is an analysis of billions of pounds of gross written premium (GWP) placed by hundreds of brokers via Open GI’s insurance software, revealing trends and insights in the UK commercial lines market.

One major insight arising from Open GI’s data, apparent from the year-on-year premium price changes seen in each quarter, is the unabated march to a soft market.

The softening market has been a key concern for commercial lines brokers for some time – for example, Insurance Times’ Five Star Rating Report: Commercial Lines and Personal Lines 2024/25, published in March 2025, found that 42 out of 177 respondents cited the soft market as their biggest concern for 2025.

The trajectory around market softening currently shows no signs of changing course.

Year-on-year growth in premiums was a mainstay in each quarter from Q2 2021 to Q4 2023 – reaching a peak of 12.8% in 2021 fourth quarter and never falling below 3% for this entire reporting period.

Then, quarter one of 2024 saw the first year-on-year premium fall since the beginning of this index’s data – dropping 1.3% from Q1 2023.

Since then, each subsequent quarter has seen a year-on-year fall in premiums, peaking at an 11% decline in the most recent quarter.

 

Nick Giddings, director of brokers and MGAs at Open GI, explained: “From the data, we can see the [commercial lines] market has softened in Q1 2025, especially in comparison to Q1 2024.

“An 11% reduction in premiums has been reported over the [last] 12-month period. Interestingly, the softening of commercial lines premiums has been taking place over the last 12 months, with the most noticeable reduction happening in the early part of this year.

“We’re aware that there has been a composite rate decline this quarter and that trend started back as early as 2021. There is a lot more commercial lines competition and favourable pricing – this will be welcomed by SMEs.

“For brokers, a softening market entails an increased focus on rebroking to secure the best terms and a close examination of policy wordings to advise if cheaper [cover] fits the needs of clients. For newer entrants, it is an opportunity to stand out and grow market share.”

Regional variations

While the softening market saw nearly universal premium price drops, a large degree of variation was seen in the magnitude of falls across regions of the UK.

The north west of England saw the largest falls, with premiums down 18.4% between the first quarter of 2025 and the first quarter of 2024.

Likewise, Scotland (-11.1%), London (-9.6%), Yorkshire and the Humber (9%) and the north east of England (-7.5%) saw large drops in the latest year-on-year data.

More modest falls in commercial lines premiums were seen in the east of England (-5.7%), the west Midlands (-5.7%), the east Midlands (-4.9%) and the south east of England (-3.8%).

Wales saw next to no change in premium prices, however, recording a drop of only 0.4% between Q1 2024 and Q1 2025.

The only region of the UK to see an increase in average commercial lines insurance premiums was the south west of England. This region saw prices increase by 0.7% year-on-year, marking it out as an unusual outlier of current trends.

Premiums in the south west of England may be taking longer to fall due to a variety of location specific factors, such as high levels of coastal erosion and the extensive areas at risk of flooding in the south west river basin district.

 

Overall, the Insurance Times Commercial Lines Premium Index has indicated that the progression of the softening market remains unidirectional – a fact that is both a challenge and an opportunity.

Speaking to Insurance Times, Alastair Blundell, head of general insurance at trade body Biba, said: “As rates soften, brokers have the opportunity to encourage clients to think about reinvesting some of their savings on insurance spend on increased limits or new cover, which maybe in the hard market they wanted, but could not afford – for example, cyber.

“The risk of underinsurance should also lessen. In a hard market, there is always the risk that an insured might under declare a sum insured in a false economy move to contain premium. When rates soften, clients are more receptive to a broker’s advice to get up to date valuations.”