Why Are Commercial Property and Casualty Insurance Costs Rising—and What Can CFOs Do About It?
Commercial property and casualty (P&C) insurance costs have been climbing year over year, with many CFOs and risk leaders seeing double-digit premium increases, even without major claims. If your renewal paperwork just landed on your desk and the numbers don’t make sense, you’re not alone.
This blog answers a critical question finance leaders are actively asking: Why are P&C costs going up, and what can you actually do to control them? Whether you’re planning for renewal or assessing your company’s exposure, here’s what you need to know.
What’s Driving P&C Insurance Rate Increases?
Climate risk, litigation trends, and inflation
Natural disasters are increasing in frequency and severity, especially in high-risk areas like the Gulf Coast, Florida, and California. At the same time, social inflation, the rising cost of legal settlements and jury awards, is pushing up liability rates. Add in material and labor inflation for rebuilding and repairs, and carriers are pricing policies with wider safety margins.
Reinsurance markets and carrier capacity
Even if your company hasn’t had a loss, your premiums are impacted by broader market dynamics. Reinsurance, the insurance that insurance companies buy, is getting more expensive and harder to place. With carriers reducing capacity in high-risk sectors or locations, the market is tightening and premiums are climbing.
Industry-specific risk volatility
Some sectors are being hit harder than others. Construction, manufacturing, hospitality, logistics, and commercial real estate all carry heightened exposure, especially in volatile geographic areas or high-liability operations. If your company falls into one of these buckets, your increases may far outpace general trends.
How CFOs Can Evaluate Their Own P&C Cost Exposure
Reviewing historical claims vs. premium growth
Start by analyzing your loss history relative to premium increases. If your losses are flat or declining but your costs keep rising, that’s a red flag. It may signal that your pricing is out of sync with your actual risk profile.
Identifying high-risk classifications and locations
Look at how your properties and operations are classified by carriers. Are they assigned high-risk codes due to occupancy type, construction materials, or ZIP code? Even small classification details can lead to outsized rate hikes.
Analyzing total cost of risk, not just premiums
Premiums only tell part of the story. Add in deductibles, uninsured losses, loss control investments, and administrative burden. Understanding your total cost of risk gives you a more strategic view of what’s really driving costs, and where you have control.
Steps to Contain P&C Costs Without Sacrificing Coverage
Use benchmarking to evaluate policy competitiveness
If your broker is only comparing this year’s quote to last year’s premium, that’s not enough. Independent benchmarking compares your program to peers in your industry, region, and size bracket, revealing if you’re overpaying relative to market norms.
Audit endorsements and exclusions for coverage gaps
Rate increases often come with coverage changes buried in the fine print. Review your policy endorsements and exclusions carefully. Missing language can expose your business to risks you thought were covered.
Improve internal loss control programs
Insurers reward proactive risk management. If you don’t have documented loss control efforts, such as safety protocols, inspections, or claims reviews, you’re leaving negotiating power on the table. Better internal controls can directly improve your pricing or reduce retained losses.
When to Use Independent Consultants vs. Brokers
Pros and cons of carrier and broker-led renewals
Brokers play a valuable role in marketing your policy and managing the renewal process. But they’re also compensated by the carriers, which can create misalignment. In a hard market, traditional broker reviews may focus more on placement than true optimization.
What a neutral review uncovers that brokers may not
Independent consultants don’t sell insurance. They benchmark pricing, audit structures, and uncover administrative costs or inefficiencies that brokers may overlook. If you’ve had the same structure in place for years, a third-party review can bring fresh insight.
Aligning review timing with budget planning
Don’t wait until two weeks before renewal to start asking questions. Independent reviews should happen well in advance of your budget cycle, giving you time to adjust forecasts, negotiate smarter, and make strategic decisions without pressure.
Conclusion: Proactive P&C Oversight Is Now a CFO Responsibility
Insurance isn’t just risk management, it’s cost control
As premiums rise, P&C insurance has become a significant budget item. CFOs who treat it like any other unmanaged cost center will uncover opportunities to reduce waste, strengthen vendor alignment, and reinvest savings.
CFOs need a defensible, data-driven process
You can’t push back on increases without proof. Benchmarking, policy audits, and total risk analysis give you the defensible data you need to hold brokers and carriers accountable.
Rising premiums aren’t inevitable, with the right insight
You may not be able to control global weather patterns or reinsurance markets. But you can control how your program is structured, priced, and managed. With the right approach, your next renewal could look very different from your last.
Want to know if your P&C costs are in line with the market?
At PolicySmart, we give CFOs clear, unbiased insights into what they’re paying, what their peers are paying, and where the gaps are hiding.
Contact us to get started.