The commercial insurance market may remain soft for another two years driven by factors including competition levels, Taylor Fry’s annual Radar report says. 

The actuarial firm expects the market will start to turn towards the end of fiscal 2028 at the earliest, with 2029 appearing more likely, barring any major natural disasters or economic shocks that could alter the trajectory and impact results and capacity.

Commercial property average written premium is expected to decline 11% this fiscal year while public liability is likely to slide 9%, and professional indemnity and directors’ and officers’ (D&O) could ease 5%. 

Taylor Fry principal Scott Duncan says continued competition, recent profitability and reserve releases suggest the commercial market will remain soft for an extended period as the pricing cycle follows a typical pattern. 

“The commercial market cycle seems to be a consistent feature. It’s something we observe historically, if you go back 40 years or so you see it coming through, and now is no exception,” he says. 

Competition is not uniform, with examples including differences in appetite for lower and higher-risk commercial properties, while insurers must weigh considerations on profitability with whether to follow the market lower to preserve market share. 

“There's a question of whether that business, if you don't follow the market, will come back to you when the market starts to harden,” Mr Duncan says. 

Relative to 2025, commercial property and professional indemnity (PI) profits were down last financial year, while public liability and directors and officers (D&O) improved, supported by reserve releases. 

The commercial property combined operating ratio is expected to deteriorate to 97% this year from 87% in 2026 and 84% in 2025 when catastrophe levels were benign. 

Cyber remains profitable, amid artificial intelligence (AI) reshaping risks and rates continuing to ease. Uptake is increasing including among smaller businesses. 

“While penetration rates remain relatively low, increased SME participation provides an opportunity for insurers to grow policy numbers even as average premiums decline,” the report says. 

AI also features in professional indemnity and D&O risk landscapes, but there’s little evidence of actual claims related to the technology. 

“So far we haven’t seen evidence of AI risks being explicitly excluded from policy coverage, and that makes sense in a soft market where adding exclusions can be tricky, but this could change, and concerns over silent AI risks remain,” the Radar report says.

Click here to read the full report.