Broker Compass | Edition #2 | April 23, 2026

April 23, 2026 | For independent P&C insurance brokers

Editor's Note

Last edition we talked about the great P&C moderation and the split market shaping Q2 renewals. This week we are going deeper on the single commercial property conversation I think matters most right now... the one your clients do not know they need to have. Tariffs, replacement costs, and coinsurance. If your book has any commercial property on it, the next four minutes are worth your time.

The Market in 60 Seconds

Tariffs are now a commercial property problem, not just a trade headline. Construction material costs are running 12-17% year-over-year (per AGC March 2026), with some categories reaching 18% above pre-tariff baselines, and most commercial property TIVs have not been updated to reflect it. Coinsurance penalties are waiting for clients who do not know their replacement values are stale. The brokers getting ahead of Q2 renewals are the ones having proactive valuation conversations before carriers force the issue. Here is what you need to be telling your commercial accounts right now.

LEAD STORY: The Tariff Problem Your Commercial Property Clients Don't Know They Have

The conversation is straightforward. Tariffs raised the cost of rebuilding your client's building, and their policy probably does not reflect it.

Since January 2026, steel tariffs of 25% and broad import levies on construction materials... lumber, aluminum, copper, HVAC components... have worked through the supply chain and into actual contractor bids. The Associated General Contractors of America reported in March 2026 that construction input costs are up 12-17% year-over-year on major commercial projects, with mechanical, electrical, and plumbing components seeing the steepest increases due to import dependency.

That creates a direct insurance problem. Coinsurance.

Most commercial property policies carry an 80% or 90% coinsurance clause. If a client's building has a true replacement cost of $4 million today, but the policy limit reflects a $3.2 million valuation from 18 months ago, they may be out of coinsurance compliance. A partial loss triggers a proportional penalty. A $500,000 fire claim might only pay $400,000 after the coinsurance calculation. That is not a conversation you want to have after the loss.

Why brokers need to move now, not at renewal:

First, clients who discover underinsurance at claim time will look for someone to blame. Your E&O exposure is real if valuations were stale and you did not act. Second, carriers are already tightening. Some major commercial property carriers are adding valuation friction at renewal for accounts that cannot document updated replacement costs, and underwriting delays on stale-valuation submissions are showing up in real brokerage workflows this quarter. Third, and this is the upside, the proactive call is a client service win. Clients who hear "I want to walk through how the tariff environment may have affected your replacement values before renewal" remember it. Clients who get the claim shortfall surprise also remember it.

The broker play:

For commercial property accounts renewing in Q2-Q3 2026, build a TIV review into your pre-renewal checklist. Verisk's 360Value and CoreLogic's RCT Express are the standard tools for replacement cost estimation. If your agency does not have direct access, your wholesale partners often do. Request updated valuations now, not at binding.

For clients with recent construction, ask about any build-outs, renovations, or equipment additions in the past 24 months. New MEP installs and HVAC replacements are where tariff cost increases hit hardest and are most likely to have been added without a corresponding limit review.

Bottom line: Your commercial property clients are probably underinsured. The math is running against them and most do not know it yet. The brokers who get ahead of this conversation will earn trust. The ones who wait will be explaining claim shortfalls.

> What to tell your clients Monday morning: > "Because of how tariffs have pushed construction costs up over the past year, I want to pull an updated replacement cost estimate on your building before we get into renewal. If the number has moved, we want to find that now, not at a claim." That is the whole script. It opens the door, protects the client, and protects you.

MARKET BRIEFS

1. Carrier Moves: Property Underwriters Adding Valuation Friction

Several of the largest commercial property insurers are adding friction to renewals for accounts that cannot document updated replacement cost valuations. Accounts on larger schedules without a recent third-party appraisal or carrier-accepted valuation refresh are being asked for documentation pre-bind, and carriers are signaling that stale-valuation submissions will see underwriting delays or coverage limitations in the high-construction-cost states. Name-specific carrier-policy details are tightening fast enough that the safest posture for brokers is: assume your larger commercial property accounts will need a valuation conversation before Q3, not after.

Accounts with clean documentation are getting cleaner quotes. Accounts without it are getting underwriting requests, delays, and, in some cases, coinsurance limitations attached to the policy form.

Action item: Build the valuation documentation step into your workflow earlier, not as a response to an underwriting query, but as a standard pre-renewal deliverable. The accounts where you arrive with a current replacement cost estimate are the ones where you control the renewal conversation.

Source: Carrier distribution guidelines Q1 2026; Insurance Journal, March 2026

2. Regulatory Watch: NAIC Opens Tariff-Impact Working Group

The NAIC Property & Casualty Insurance Committee has opened a working group to monitor the insurance market impact of tariff-driven construction cost inflation, with a preliminary report expected by Q3 2026. Several state insurance departments have issued informal guidance indicating they are watching for tariff-related underinsurance issues in the admitted market.

The concern is consumer protection. Policyholders who face coinsurance shortfalls at claim time may not have understood the risk at binding. Expect formal guidance from several states before year-end on disclosure requirements around valuation adequacy.

Action item: Review your agency's disclosure language for commercial property clients on coinsurance. Documenting your proactive client conversations on this topic is your best protection if a disputed claim triggers a regulatory inquiry.

Source: NAIC P&C Committee updates; State DOI bulletins, Q1 2026

3. Tech Corner: Valuation Tools Worth Knowing

Three platforms brokers are using to address the tariff-driven TIV problem.

Verisk 360Value. The industry standard for commercial replacement cost, used by underwriters at most major carriers. If you can access it through carrier relationships, do. Outputs a defensible, locally-indexed number.

CoreLogic RCT Express. Strong for the $500K-$5M TIV segment where a full appraisal is not cost-effective. Quick estimates with zip-code-level cost adjustments.

For agencies without direct platform access, your wholesale and MGA partners likely have Verisk or CoreLogic access. Asking your key wholesale contacts for a valuation run on your top commercial property accounts is a legitimate ask, and a low-cost way to audit your book before carriers make it mandatory.

Source: Verisk, CoreLogic product documentation; agent roundtable feedback, Q1 2026

4. Builders Risk: The Quiet Tightening

While the commercial property market gets the attention, builders risk is experiencing its own version of the tariff problem. Project budgets submitted at inception are landing 15-25% below actual construction costs at completion on projects that started in 2025 or early 2026. That gap means stated limits are inadequate, a problem discovered at partial loss or project dispute, not before.

Several E&S builders risk markets have moved to require sworn statements of values mid-project for any construction exceeding 18 months or $5 million in stated value. At least two admitted carriers have exited builders risk for wood-frame residential in high-CAT states following back-to-back adverse years.

Action item: For any builders risk account in your book, confirm the stated project value reflects current contractor bids, not original estimates. The cost to increase limits now is far smaller than the argument at project closeout.

Source: E&S market bulletins; Risk Placement Services; IRMI Builders Risk Guide, Q1 2026

WHAT TO WATCH

1. Tariff escalation timeline. The current tariff structure is subject to ongoing negotiation. Any escalation, particularly on Canadian lumber or Asian steel imports, hits construction replacement costs directly and quickly. Watch trade policy developments through May for signals on where input costs are heading into the fall renewal season.

2. Carrier coinsurance enforcement patterns. As carriers update commercial property underwriting guidelines, watch for stricter enforcement of coinsurance clauses on accounts with stale TIVs. Proactive valuation reviews are both a client service and a placement protection move.

3. E&S builders risk capacity. Further admitted carrier exits from this class would push commercial construction volume to surplus lines, creating placement challenges on projects with lender requirements for admitted paper. Know your E&S builders risk markets now.

4. Mid-year commercial auto renewals. Combined ratios above 104 and climbing are driving carriers to be selective about mid-year renewals on auto-heavy accounts. Trucking, delivery fleets, and contractors with owned vehicles are most exposed. If you have commercial auto accounts renewing May-August, start remarketing at 90 days out, not 30.

Broker Compass is published weekly for independent P&C insurance brokers. Market data sourced from AM Best, S&P Global, Risk & Insurance, Business Insurance, NAIC, AGC of America, Verisk, CoreLogic, and industry reports as cited. This newsletter does not constitute legal, compliance, or coverage advice.

Subscribe: [broker-compass.ghost.io](https://broker-compass.ghost.io) Forward this to a broker friend who needs to be having the TIV conversation with their commercial property book. Next edition (April 30, 2026): Mid-year commercial auto renewals, the 90-day remarketing playbook, and why trucking accounts are the canary in the combined-ratio coal mine.