The state of the insurance market

Property tailwinds, casualty pressures shape real estate insurance market in 2026

KEY TAKEAWAYS

Real estate insurance buyers face a split market — one in which property remains favorable, and the other a hard casualty market that shows signs of moderating.

The property market’s ample capacity and subdued catastrophe environment invite competition among carriers and can potentially improve program offerings. Buyers should take advantage of a favorable market to improve their properties.

Buyers should be aware of evolving lender requirements when refinancing, including higher limits and coverages that carriers often exclude.

Commercial real estate owners in 2026 are navigating a bifurcated property and casualty insurance market.

On one hand, buyers continue to enjoy a favorable property market with ample capacity and competition for business, thanks in part to a subdued natural catastrophe environment. On the other hand, the casualty market remains somewhat challenging, although it shows signs of stabilizing.

Bottom Line

Real estate insurance buyers, particularly those with more favorable loss histories, have elbow room within their insurance programs and should work with their brokers to reexamine their programs, particularly their umbrella excess towers, to adjust limits or add newer entrants higher up in the tower.

A multitude of late-season hurricanes could see this soft market begin to turn...but the property market has so far been resilient in the face of these risks.

Aaron Culbertson U.S. Real Estate Practice Leader Lockton

Property tailwinds

It continues to be a buyer’s market for property insurance and should remain that way through the rest of 2026.

Recent renewals show that buyers, especially those with clean risks, can obtain rate decreases.

One of the biggest factors in the soft property market is a mismatch between supply and demand that benefits buyers.

Buyers can find capacity throughout the property market with plenty of established companies and new entrants eager to win business.

Another key element in the property market is the relatively tame natural catastrophe environment.

For the first time since 2015, no hurricanes struck the U.S. in 2025. This year may be more of the same. For 2026, the National Oceanic and Atmospheric Administration (NOAA) predicted a 55% chance of below-normal hurricane activity in the Atlantic Ocean. That said, NOAA’s confidence in its forecast is 70%, far from assured.

Carriers have built strong enough reserves that the market should be able to withstand at least two significant Atlantic hurricanes making landfall.

Historically, the strongest Atlantic hurricanes have made landfall between late August and the end of October; however, wind season does not officially end until Nov. 30.

“A multitude of late-season hurricanes could see this soft market begin to turn,” said Aaron Culbertson, U.S. Real Estate Practice Leader at Lockton.

“Secondary perils like wildfires, severe convective storms, and high-wind events are worth watching now and in the future,” continued Culbertson. “But the property market has so far been resilient in the face of these risks.”

Insured losses from severe convective storms have already exceeded $35 billion in 2026, making them one of the costliest recurring weather perils.

While buyers may enjoy the current property market, they should avoid becoming complacent and expecting it to remain soft in 2027.

Culbertson concluded, “There are signs of a rate floor starting to emerge, and significant double-digit decreases are not guaranteed to continue — especially on underperforming risks.”

Casualty challenges

Buyers in the last two years have faced a less forgiving casualty environment as carriers aggressively push rate increases and look to limit coverage in the face of a challenging legal environment. Real estate buyers are increasingly taking larger retentions or limited coverage to reduce costs.

“This year, the casualty market, while far from softening, has begun moderating to a degree,” said Culbertson.

Certain segments of real estate, such as market-rate multifamily properties with favorable loss histories, can secure flat to single-digit renewals. Rate decreases are rare, but they do happen.

Other property types that inherently carry higher risks — affordable multifamily, student housing, and senior living, for example — face more rigorous renewal scrutiny.

A contributor to the moderation in the casualty market is the emergence of states enacting tort reform.

Florida passed a unique and sweeping tort reform bill in 2023 that, among other things, creates a “safe harbor” for multifamily apartments that meet a baseline set of safety and security protocols, including improved lighting in common areas and deadbolts and locks on doors and windows.

Elsewhere, six states enacted third-party litigation funding (TPLF) in 2025, while at least 34 additional bills were proposed across 21 states. Approximately 12 of those proposals carried into 2026. TPLF can drive higher claim costs when plaintiffs can sustain litigation and hold out for higher settlements. TPLF reforms range from transparency and disclosure requirements to prohibitions on outside funders from directing legal strategies.

Capacity is constrained in the casualty market, as many carriers are reluctant to write policies for large multifamily portfolios. Buyers can access capacity at lower rates from newer market entrants, such as managing general agents (MGAs) and managing general underwriters (MGUs). These options may offer benefits to buyers, but they should be discerning and work with brokers to see which are adequately capitalized and tested against losses and which are not.

Real estate risks placed with an admitted insurance carrier are seeing significantly better results than those that are pushed into the excess and surplus lines market.

Lender requirements are also creating pressure as government-sponsored enterprises like the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) more explicitly call out coverage expectations that were historically treated as common and customary.

This is especially challenging as insurers pull back from exposures, such as sexual abuse, assault, and firearms risks that carriers increasingly seek to exclude, but that lenders still expect borrowers to address. In some instances, these lenders require escrow accounts to fund coverage that is not being provided.

The September 2026 Lockton Real Estate Pulse Survey polled real estate professionals about how insurance is impacting their business. The survey showed that insurance carriers are writing policies to higher property valuations about as often as they require windstorm coverage. Furthermore, insurance and risk-related issues are a factor in delays in closing real estate deals nearly one-third of the time. Among the challenges in the commercial real estate market, elevated interest rates lead the way. While data centers are a hot corner in the real estate market, industrial remains the greatest investment opportunity in the next two years.

Recommendations

Take advantage of competition.

Real estate buyers should work with experienced brokers to rethink their program while carriers are willing to compete. Capacity is freeing up, creating a good opportunity for buyers to take a fresh look at their limits, coverage, and deductibles. New market entrants and restructuring can drive results.

Ensure you are up to date on lender requirements.

“If you’re considering or going through refinancing, make sure you’re engaging and communicating with your broker early in that process,” said Sean Ryan, Vice President of Real Estate at Lockton. “We’ve seen lender requirements get stricter and put the program out of compliance. Collaborate with your broker to ensure lender requirements during a refinance are compliant with what they need.”

Lenders may post new, higher limits or require insurers with minimum AM Best or S&P Global ratings. Buyers may miss these new requirements during refinancing, resulting in an unpleasant surprise during or after closing.

Use this opportunity to invest.

The property market won’t stay soft forever, so buyers should reinvest premium savings in loss control, risk management, and security measures. Insurers will be more receptive to working with insureds who have invested in their properties during the soft market.

“By reinvesting the right way, you'll be well-positioned to cushion the bump up when market conditions turn,” Ryan said. “Insurance companies will be looking at who they want to stay with when changes occur — which clients have been good? Who is resilient? Who has invested in their loss control?”