Capacity restrictions, especially for catastrophe-exposed locations, will continue to drive commercial property insurance prices higher this year, according to a report by USI Insurance Services Inc.

Frequency and severity of severe weather events, shortage of reinsurance, an uncertain economy and inflationary pressures are prolonging rate, capacity and coverage challenges in the property market, putting a strain on policyholder budgets, USI said.

Even more favorable risks, such as catastrophe-exposed property with minimal loss history and good risk quality will see rate increases of 25% to 150% in the second half of this year, up from 15% to 50% rate increases in the first half, USI said in its mid-year Commercial Property and Casualty Market Outlook released Tuesday.

Less favorable property risks with poor loss history or risk quality will continue to see rate increases of 25% to 150%, unchanged from the beginning of the year, while optimal property risks will see rate increases of 5% to 15%, compared with 5% to 10% at the start of the year, according to USI.

Some property/casualty insurance buyers will see rates trend lower, as parts of the market continue to stabilize, USI said.

Public company directors and officers liability rates are showing flat to 20% rate declines at the mid-year point, compared with flat to down 10% in the first half of the year, USI said.

D&O rates continue to be “very competitive,” but insurers may begin to push back on a second year in a row of significant rate decreases, feeling that rate adequacy is no longer there to support profitability, USI said.

Cyber insurance policyholders are seeing flat rates for optimal risks, compared with 20% or higher rate increases at the start of the year. For more challenged cyber risks rate increases are 15% or higher, compared with 20% or more at the start of the year.

“The cyber market, while vastly improved, is constantly facing new threats and therefore remains a critical area where insureds should stay up to date,” USI said.