Navigating familiar tracks

2025 opened with uncertainty for insurers, businesses, and individuals alike. And while much has changed over the past year, the industry finds itself on a similar track heading into 2026 — with volatility and unpredictability still the dominant themes.

January delivered an early test in the form of costly California wildfires, forecasts that the economy would cool, and a new presidential administration. Inflation had eased from its 2022 peak but remained stubbornly high, while shifting interest rate expectations forced investors to recalibrate. Expansive tariffs — and the renewed trade tensions that followed — put additional pressure on supply chains and created a new layer of uncertainty.

Despite all this, both the U.S. economy and the P&C industry have shown remarkable resilience. As we publish our December 2025 Lockton Market Update, commercial insurance conditions remain broadly favorable across most lines, with the notable exception of third-party liability. The industry is well capitalized, insurers have regained financial health, reinsurance costs have moderated, and property markets have strengthened far more quickly than many anticipated.

While many of us long for clarity, 2026 promises more uncertainty. Inflation, rising layoffs, erratic tariff policies, regulatory conflict, political gamesmanship, and the potential lasting effects of a prolonged government shutdown make it difficult to predict much beyond the next quarter.

Insurers face slower topline growth, moderating investment yields, reserve uncertainty, and uneven macroeconomic signals. Capital flows remain strong but more fragmented than in prior cycles. Managing general agents, fronted programs, and alternative capital providers continue to expand their footprint, giving buyers more choice — but also requiring sharper insight into the stability and durability of the capacity behind it.

At the same time, insurers are accelerating investments in technology, embedding artificial intelligence (AI), advanced analytics, and automation deeper into underwriting. These shifts will change industry practices and place even greater value on high-quality, structured data as a determinant of access, pricing, and terms.

As we close out the year, momentum around product innovation, operational efficiency, and talent development remains strong. Yet caution remains the watchword, with insurers grounded in fundamentals: disciplined risk selection, program efficiency, and strategic readiness.

For buyers, this environment presents both opportunity and responsibility. There is real potential to capture savings and reposition programs for a more volatile and uncertain environment. Rather than simply renew, buyers should use this moment to look ahead, reevaluate program structures, test assumptions, and make thoughtful decisions about how to deploy risk capital in 2026 and beyond.