Premiums are climbing: What’s fuelling the cost?
In 2025, many U.S. businesses are expected to face higher insurance premiums. According to data from Marsh McLennan, the world’s largest insurance broker, commercial property insurance rose by an average of 10% in Q4 2024 and this upward trend is continuing.
“The rise in business insurance premiums is being driven by economic volatility, climate risk, and increasing cyber threats,”
said John Doyle, President and CEO of Marsh McLennan.“Clients are being advised to start renewals early and re-examine policy limits in light of higher replacement and legal costs.”
For example, small restaurants in hurricane-prone areas like Florida or Louisiana are seeing property and liability premiums climb by as much as 20%.
Cyber coverage is now critical
As cyberattacks increase in frequency and scale, cyber insurance is becoming a non-negotiable for businesses of all sizes in 2025. A study by Cybersecurity Ventures predicts a ransomware attack will occur every 2 seconds by the end of 2025.
“We’ve seen a dramatic rise in demand for cyber coverage,”
stated Sarah Stephens, Global Head of Cyber at Marsh.“But pricing is still high. Businesses need to show robust cybersecurity measures in place to qualify for reasonable premiums.”
In 2024, a manufacturing firm in Ohio lost $1.8 million to a phishing scam. Without cyber insurance, the company was forced to shut down for three months.
Also Read: How Life Insurance Is Changing In 2025
Climate change is reshaping risk assessment
Extreme weather is altering the way insurers underwrite risk. Businesses in wildfire, flood, or storm-prone areas are being reassessed more frequently and in some cases, denied coverage altogether.
“Insurers are no longer just looking at historical data,”
said Loretta Worters from the Insurance Information Institute (Triple-I).“They’re using real-time climate models to assess exposure and set rates accordingly.”
Warehouses in California’s inland valley regions and retail outlets along the Gulf Coast are being hit hardest, with many needing to look for coverage from specialised or surplus lines insurers.
General liability policies are under review
Litigation risk is rising in 2025, especially for sectors like construction, hospitality, and retail. Insurers are responding by tightening terms in general liability coverage.
“We’re seeing more exclusions in standard business insurance policies,”
warned David Sampson, President of the American Property Casualty Insurance Association (APCIA).“Things like assault and battery or communicable disease exclusions are more common now than they were even two years ago.”
This means that businesses must carefully review policy wording and discuss any potential gaps with brokers before renewing.
How to prepare your business for insurance in 2025
Industry experts recommend businesses take a proactive approach. Start renewal discussions early, invest in cybersecurity and property protections, and work closely with risk consultants.
“Being able to demonstrate risk mitigation is essential in 2025,”
said Tracy Dolin-Benguigui, a senior director at S&P Global Ratings.“It could make the difference between securing affordable coverage or facing policy denial.”
Businesses are also advised to keep detailed records of claims, inspections, and upgrades to buildings and systems — especially if seeking better terms from insurers.