Insurers rolling along
Property and casualty insurers continue to report improved underwriting results, especially in personal lines. Performance in the third quarter was strong, supported by healthier combined ratios, rising investment income, and solid returns on equity. (See Figure 9.) Insurers are also investing heavily in technology and building AI capabilities.
Even so, many are signaling that the environment is becoming more nuanced. Net written premium growth moderated for some insurers, while exposure growth is uncertain and new money yields have moderated. In earnings calls, several insurers noted competitive dynamics, evolving loss trends, and the cumulative effect of multiyear rate reductions across some lines. All of this will shape industry priorities heading into 2026.
For buyers, not much has changed since our September Lockton Market Update:
Reinsurance market holding steady
Property reinsurance capacity remains robust, and pricing continues to favor reinsurance buyers. Limits, terms and conditions, and attachment points currently remain stable, and pricing is expected to continue to soften in the near term, barring a major catastrophe or other significant industry loss. Reinsurers, however, remain concerned about so-called “secondary” perils, such as wildfire and flood, which remain difficult for insurers to price and underwrite.
The liability reinsurance market, meanwhile, has seen little change. Rates continue to climb at a steady and predictable pace, and reinsurers appear comfortable with the overall health of their liability portfolios. Favorable underlying rates and investment returns are helping to offset concerns about social inflation and loss severity. Profitability, however, remains uncertain; some reinsurers are trimming capacity, although newer entrants are selectively expanding where they see strategic upside.
Cyber reinsurers have expressed some concern about the recent Amazon Web Services (AWS) and Microsoft outages, but the consensus is that the relatively short duration of the event will help to limit insured losses. Reinsurers, including several new entrants in 2025, largely continue to deploy meaningful capacity. Cedants continue to optimize portfolios through time-bound aggregate protections, low-attaching event covers, and other structural refinements.
Insurers looking forward
In discussions with dozens of insurers during the Council of Insurance Agents & Brokers’ recent Insurance Leadership Forum, seven recurring themes emerged:
01
Underwriters are staying disciplined.
Carriers are focused on maintaining adequate program structures and are explicit about not chasing the market. Many continue to seek targeted rate increases for buyers with more complex risk profiles.
02
Risk quality remains central.
With premium growth slowing, competition for best-in-class risk is intensifying. Buyers with credible data, clean loss histories, and demonstrated risk improvements will see superior outcomes. Others may face tougher terms or fewer options.
03
Yields matter.
The Fed’s pivot toward rate cuts marks a new phase in monetary policy. For insurers, lower interest rates translate to a lower cost of capital. But this also impacts investment yields, particularly for new money. As a result, insurers will turn their attention to underwriting profitability and reserve adequacy, especially in long-tail casualty.
04
Credit and collateral are back in focus.
Insurers are tightening collateral terms on large deductibles and fronted programs, with heightened attention to liquidity, debt covenants, and collateral types. MGAs and fronting businesses now write more than $100 billion in premiums. It’s essential for buyers to understand who holds the risk — the MGA, the front, or the reinsurers behind it — and how claims could be handled if any party encounters financial stress.
05
Supply chain challenges persist.
Geopolitical tensions and tariffs continue to disrupt supply chains, impacting transit times and creating contingent business interruption, inventory valuation, and supplier contract exposures. War risk remains a concern in marine and transit.
06
Insurers are doubling down on technology.
Carriers continue to showcase investments in technology, embedding AI and analytics deeper into risk selection and underwriting. High-quality, structured data is increasingly a prerequisite for access, responsiveness, and favorable terms. Brokers and buyers must understand how data is used — and how algorithmic decisions drive outcomes.
07
Carriers are adopting new strategies.
There is strong momentum around product innovation, operational efficiency, and talent development. Many are embedding claims resources into product teams and investing in next-generation leadership programs. Technology and analytics continue to influence underwriting and partnership strategies.
Despite support from the reinsurance marketplace, primary carriers remain mindful of profitability. For now, insurers generally continue to perform well, but many are worried about the cumulative effects of steady rate reductions over the last several years.
Several insurers believe that conditions in certain lines are at or near the bottom and that emerging loss activity may test the sustainability of current pricing levels. Economic uncertainty is also weighing on decision-making and is likely to influence underwriting postures into 2026.
Trends to watch
Insurers continue to monitor several broader, long-term trends, including:
01
CLIMATE CHANGE & NATURAL CATASTROPHES
Although the 2025 Atlantic hurricane season was relatively mild, insurers recorded $80 billion in catastrophe losses in the first half of the year, second only to 2011’s $125 billion first-half losses, according to Swiss Re. Concerns persist that extreme weather is outpacing models, while DOGE cuts and the federal shutdown have elevated concerns about the reliability of federal disaster response efforts.
02
THE ECONOMIC & POLITICAL LANDSCAPE
Rising trade tensions, military conflicts, and more continue to complicate long-term planning and capital allocation. There is also growing unease about diverging global regulations around AI, cybersecurity, and environmental liability.
03
EVOLVING CYBER THREATS
Cyber risks — including ransomware, supply chain attacks, and AI-driven exploits — continue to grow in scale and sophistication. Coverage adequacy, aggregation risk, and silent cyber exposures remain key concerns. (See Recent outages shine spotlight on systemic cyber risks for more.)
04
INSURANCE INDUSTRY CONSOLIDATION
Through Nov. 12, 10 insurance mergers valued at $1 billion have been announced this year, according to Dowling & Partners. (See Figure 10.) For some insurers, consolidation offers scale, diversification, and access to talent and specialized products. For others, strategic divestitures may improve core focus and returns on capital. For insurance buyers, these deals may strengthen relationships with well-capitalized partners but could also reduce competition and introduce renewed rate pressure.
P&C insurers remain much as we have described them in recent updates: fundamentally healthy and stable, but far from complacent. Recent performance has been strong, yet insurers remain mindful of how quickly conditions can shift. As a result, underwriting behavior reflects a blend of confidence and restraint, characterized by rational pricing, selective appetites, and highly intentional portfolio strategies.
