The U.S. insurance market enters 2026 going in two directions at once: Property insurance rates are declining after a muted catastrophe year and an influx of reinsurance capital, while casualty lines continue to harden.
Property insurance rates are expected to be flat to lower overall. However, businesses in areas susceptible to natural catastrophes will continue to face a hard market that may include fewer players and more stringent policy terms.
While property insurance is loosening, the same can’t be said for casualty lines, which are being stressed by high-dollar judgments and aggressive plaintiff attorney litigation tactics.
Here’s a look at the P/C industry in 2026 and what insurance buyers can expect.
Property market: relief, but with caveats
The property insurance market is moving into a correction phase, marked by softening rates and growing competition among insurers, according to analysts.
A quieter-than-expected hurricane season in 2025, combined with record reinsurance capital levels, has resulted in lower property reinsurance rates overall. However, properties in areas exposed to natural catastrophes will still feel pressure.
Businesses that generally have lower claims than average and are not in distressed markets may be able to negotiate better terms, higher limits and, in some cases, lower deductibles.
Even where premiums are easing, underwriters remain focused on accurate property valuations, risk mitigation and geographic exposure.
Casualty and liability: pressure continues
Meanwhile, casualty lines remain the industry’s most challenging segment in 2026. Social inflation continues to push liability costs higher, fueled by larger jury awards, expanded theories of liability and aggressive litigation tactics.
Commercial auto liability remains particularly stressed, with insurers absorbing more than $10 billion in underwriting losses over the past two years, according to one report. The average cost of a commercial auto claim has more than doubled since 2015, driven by higher vehicle repair costs and litigation trends.
General liability and umbrella coverage are also under pressure for the same reasons, especially for higher-hazard risks and larger fleets.
Meanwhile, employment practices liability claims remain frequent and complex, with annual liability claim costs due to social inflation growing approximately 7% in 2024, according to the Swiss Re Institute. That’s the largest annual increase in two decades.
Nationally, general liability, commercial auto, umbrella and excess liability rates are projected to range from flat to increases of up to 15%.
The one bright spot is the workers’ compensation sector, which has enjoyed its 12th consecutive year of combined ratios under 100% under a backdrop of falling claims frequency and higher average claims costs.
However, stress fractures are showing up in California’s workers’ comp sector. The state insurance commissioner recently approved a 9% increase in workers’ compensation rates, an indication that claims are starting to dig into insurer profits.
What commercial buyers should expect
The industry enters 2026 from a position of financial strength. According to Swiss Re Institute data cited in multiple market reports, the U.S. P/C industry is expected to sustain a return on equity of roughly 10% through 2026.
This capital strength is a key reason why buyers are seeing improved competition in property and select specialty lines. However, insurers remain disciplined. Underwriting scrutiny is still elevated for accounts with adverse loss histories, weak risk controls or exposure to emerging liabilities.
While there is more capital flowing into the market, insurers are still discerning and will impose stricter terms on businesses that have struggled with claims or have significant exposures.
Litigation trends and liability severity show few signs of reversing, keeping pressure on auto, umbrella and excess lines.