The real estate insurance market is showing signs of easing, offering a rare chance for buyers to score better deals. Brokers say the property and hospitality insurance sectors are becoming more competitive, leading to softer prices, though liability insurance remains a tough area.
Lockton’s update from February 2026 highlights increasing competition among insurers, especially in property and hospitality lines where pricing is expected to continue improving through the summer months. One major factor helping lower property insurance rates is the abundance of reinsurance available for properties at risk of natural catastrophes. Add to that a mild Atlantic hurricane season in 2025, and insurers have more confidence to offer better pricing. For non-residential commercial properties, rates have dropped between 5% and 10% for single insurer policies, with even bigger reductions for more complex insurance setups involving multiple insurers.
This shift marks a clear turnaround from just a few years ago. Data from CBIZ shows that in the first quarter of 2023, commercial property insurance rates surged by an average of over 20%. That was the highest in 20 years and part of a hard market phase that began in 2018 and lasted about six years—much longer than the typical three to four years.
The size of this insurance market is huge. Globally, commercial property insurance was valued at $378 billion in 2025 and is expected to grow to nearly $590 billion by 2029. In the US alone, policyholders’ surplus—the extra capital insurers hold—reached $1.2 trillion by September 2025, a 24% jump over three years. This extra capital is pushing insurers to compete more aggressively, which is helping push prices down.
Not all real estate segments are benefiting equally. Commercial office spaces are still struggling, with vacancy rates climbing steadily since 2021. Analysts at NAIOP predict office demand will keep dropping through 2027. On the other hand, insurance capacity for habitational properties is plentiful, especially for wood-frame buildings, whose rates have fallen between 5% and 15%. However, casualty insurance on these properties is facing tougher conditions. Insurers are asking for higher rates, bigger deductibles, and stricter terms. Many retail insurers have even pulled out of the multifamily housing market.
A new variable in the market is President Trump’s January 2026 executive order limiting institutional ownership of single-family homes. Industry watchers like Lockton are keeping an eye on how this might change insurance risks down the line.
The hospitality sector is feeling some pressure too. Property insurance rates are stabilizing, but casualty coverage remains challenging. Insurers are cautious because of concerns over issues like sexual misconduct and crime risks in hotels. The Federal Reserve Bank of Atlanta’s hospitality index has shown a steady decline in conditions since 2021.
Liability insurance is also tightening. Insurers have cut back on umbrella and excess coverage, adding exclusions for risks such as assault and battery, mold, Legionella, and claims related to the chemical PFAS. Social inflation—where legal costs rise due to more lawsuits and advertising by law firms—is adding to the strain. For example, legal service ads in 2024 cost $2.5 billion, a 39% increase since 2020.
Cyber insurance remains competitive, although standard policies may not fully cover the complex setups common in real estate investments today, like joint ventures and fractional ownership.
Meanwhile, industrial properties, particularly data centers, are growing. Experts predict that by 2030, hyperscalers—or large cloud service providers—will account for 61% of all data center capacity, up sharply from today’s 44%.
According to WTW’s Insurance Marketplace Realities 2026 report, most commercial insurance lines—except excess casualty—are in a soft market phase, meaning conditions favor buyers.
In short, after years of tough conditions, many sectors of real estate insurance are seeing softer markets and better pricing. However, liability coverage remains a challenge, and certain segments like office space still face headwinds. Buyers looking for insurance may find this a good time to explore new options as insurers compete more actively.