2026 to 2027 Property Insurance Outlook: What CRE Owners Should Expect

If your last renewal came in flat or slightly lower, that is consistent with the broader market. After several difficult years, conditions have shifted in favor of buyers. The relief is not distributed evenly, though, and where your property falls within that spread will shape your next few renewals.

A term worth knowing first: hard market and soft market. A hard market is when carriers are cautious and are less willing to underwrite a specific class of risks, often due to rising losses or unknown risks. Consequently, prices rise, coverage narrows, and some properties struggle to find any insurer at all. A soft market is the reverse: multiple carriers competing and terms improving, with prices dropping. From roughly 2020 through 2023 the property market was firmly hard, especially due to increased catastrophes through the late 2010s and inflation, driving up building repair values. It has been softening since due to more capital providers coming into the market.

What is driving the shift

Two forces are working in your favor.

The first is capacity, which is the total amount of coverage insurers are willing to write across the market. Think of it as the industry's available shelf space. Capacity has been restored by strong capital inflows into the (re)insurance market, meaning the insurance that insurance companies buy to protect themselves against very large losses. That includes record levels of alternative capital, which is money from investors such as pension funds that flows in through instruments like catastrophe bonds rather than through traditional insurers. More capital behind the market means more capacity, and more capacity means carriers compete for your account, dropping pricing.

The second is loss experience. Global insured catastrophe losses in 2025 came in near $107 billion, which is large by historical standards but well below the roughly $150 billion projected at midyear. Several anticipated hurricanes either missed the U.S. or tracked offshore. A few better than expected storm seasons gave carriers room to price more aggressively.

How that translates by property type

The market is competitive, but it is also selective. Renewals are broadly sorting into three groups:

• Well maintained properties outside catastrophe zones with clean loss history. Many are landing flat to down 5 percent, with stronger risks approaching double digit reductions.
• Layered and shared programs. These have seen the widest swings, with reductions of 10 to 30 percent on favorable accounts. Layered means several insurers stack on top of each other, with one covering the first $5 million of loss, another the next $10 million, and so on. Shared means multiple insurers each take a percentage of the same layer. Larger properties often need this structure because no single carrier wants the entire exposure.
• Catastrophe exposed properties and accounts with recent losses. Pricing here remains firm and underwriting remains tight. CAT, short for catastrophe, is the industry shorthand for named storm, wildfire, earthquake, and severe convective storm exposure. A softening market does not automatically reach CAT exposed risks.

The valuation issue underneath the good news

Rates have come down, but the cost to rebuild has not. Commercial reconstruction costs rose roughly 4.4 percent year over year nationally, and above 7 percent in some states, driven by tariffs on building materials and ongoing shortages of skilled labor, according to Verisk.

The gap has implications for insurance. Insurance to value, often abbreviated ITV, is the relationship between what your building is insured for and what it would actually cost to rebuild. When your insured value drifts below actual replacement cost, your ITV is off.

The reason that matters is a policy provision called coinsurance. Coinsurance requires you to insure the property to at least a stated percentage of its full value, commonly 80, 90, or 100 percent. If you fall short, the carrier can reduce your claim payment by roughly the same proportion, and that reduction applies to partial losses, not just total ones. A building insured at 70 percent of its required value may recover close to 70 percent of a covered partial claim. A lower rate applied to a value that is too low still leaves real exposure on the table.

Refreshing your replacement cost figure annually is the most reliable way to keep ITV where it should be.

What underwriters are still looking at

Additional capacity has not made underwriting casual. Roof age is usually one of the first things checked, along with overall building condition, maintenance history, and documented capital improvements. Owners who can produce that documentation consistently receive better terms than owners who cannot, even when the two buildings look similar on paper.

Three ways to use this market

1. Refresh your replacement cost valuation with a current, defensible number rather than an inflation adjustment applied to an older figure.
2. Assemble your capital improvement record. Roof, electrical, plumbing, and HVAC work, with dates and dollar amounts.
3. Consider keeping a broad carrier panel. Your panel is simply the group of insurers participating on your program. Consolidating down to one or two while pricing is attractive can feel efficient, but a diverse panel tends to pay off when the market firms again or when you have a significant loss and need participants willing to stay on the account.

What this means for you

You have more leverage now than you did three years ago, and it is worth spending some of it on terms rather than only on price. Owners who use a soft market to correct their insurance to value and strengthen their risk profile tend to be the accounts carriers work hardest to keep when pricing eventually turns.