P&C Report: 2026 Forecast

INTRODUCTION

2026 will be a pivotal year for the Excess and Surplus (E&S) marketplace within Property and Casualty (P&C) following the unique market dynamics of 2025. In short, market cycles are shifting with a softening hard market combined with E&S expansion. This creates both challenges and opportunities for brokers and agents.  

The market is characterized by moderate growth, plentiful capacity, and strong underwriting discipline. That discipline is necessary given the continued impact of social inflation, nuclear verdicts, and private equity-funded litigation support for the plaintiff’s bar. The good news is that the industry has adjusted to these challenges with proactive strategies designed to limit their impact. 

The E&S market has recorded 14 straight years of premium growth, often with double-digit increases. It has doubled its share of total P&C premiums compared to a decade ago, according to a September 2025 article on Beinsure Media. Casualty lines now account for more than half of the direct premiums written in the Excess space.  

Sector health is further represented by carrier profitability. The relatively tame Atlantic Hurricane season (covered in more detail below) helped, motivating more carriers to enter vertical and geographic markets. 

Carriers increasingly releasing reserves 

Numerous carriers have reduced the amount of money they set aside for claims as overall claim frequency has declined. As a result, many carriers outperformed initial financial projections for 2025, posting generally positive balance sheets. The use of reserve releases has also emerged as a trend that partially offsets the effects of social inflation and runaway jury awards, which typically drive rates higher. This is a development that many industry leaders, from regulators to rating agencies, will be closely watching. 

Regulatory and litigation trends  

State legislative activity is shifting how carriers view states. For example, Georgia attracted significant litigation in recent years, rivaling New York, Illinois, and other states where some carriers have reduced their business. Civil litigation filings in Atlanta-area courts rose sharply in 2024 and continued to increase in 2025, with tens of thousands more cases than in prior years, according to Insurance Journal. 

However, the Georgia legislature passed some tort reform bills in 2025 that may lessen the number of filings in 2026 and beyond. 

Tort reform is having a positive impact in other states as well, including Florida. Nuclear verdicts are falling, and the tort reforms passed in 2022-23 eliminated one-way attorney fees, which barred Assignment of Benefits (AOBs) in new policies, tightened rules for bringing bad-faith claims, and created broader tort-reform measures, according to Insurance Journal. 

The Insurance Insider highlighted Florida Insurance Commissioner Mike Yaworsky in December, who indicated that both established, national carriers and newly formed ones are actively pursuing new business in the Sunshine State. These reforms are causing carriers to show more interest in doing business in Florida.  

RATES

We are witnessing a period of “measured hardening” in the P&C sector. Pricing discipline is expected to hold in many core lines with less aggressive rate increases, according to Reinsurance News.  

Rating agencies such as Fitch also indicate that underlying fundamentals and profitability remain solid. As a result, single-digit increases are likely across many sectors. However, with January 1 reinsurance renewals making headlines, we expect moderate rate reductions across the board. 

CAPACITY

Little has changed over the past year in terms of capacity availability among most P&C verticals. Part of that availability is tied to the broad access that brokers and agents have to global carrier capacity. Most industry experts suggest that the amount of capital willing to write non-admitted/specialty P&C risk globally is higher than at any time in the last decade. Meanwhile, reinsurers are increasingly comfortable backing E&S platforms. We expect available capacity to continue. 

TERMS & CONDITIONS (T&C)

Carriers have carefully reviewed the language within their policies in recent years. This language should remain consistent across Property and Liability, particularly given the impact of social inflation, runaway jury awards, and litigation funding. These challenges will require continued underwriting discipline, with little easing expected. Carriers recognize that maintaining this discipline over the long term is essential to preserving the progress made in recent years. 

Contributor: Paul G. Smith, Group Senior Vice President, H.W. Kaufman Group, New York, NY

Personal Insurance:

Last year began with record-setting wildfires in Southern California that generated more than $50 billion in industry losses, creating early uncertainty. However, the remainder of the year proved more benign with other catastrophic (CAT) events. 

U.S. CAT weather-related claims were lower than expected in 2025, particularly in the Southeast. A closer look suggests that luck may have been a contributing factor. 

Despite an active Atlantic hurricane season with 13 named storms, only one tropical storm made U.S. landfall, according to the National Oceanic and Atmospheric Administration (NOAA). It was the first time since 2015 that so few named storms reached the U.S. This provided carriers with much-needed relief and allowed many to post profitable results.  

Those California fires were the costliest wildfires on record, resulting in an estimated $40 billion in insured losses. U.S. wildfire acreage was below levels seen in some recent peak years and, in many areas, below long-term averages, partly due to varying regional weather patterns and early-season conditions across much of the West Coast, according to the California Department of Forestry and Fire Protection.  

Large hailstorms were less frequent, and severe flooding was less widespread across the U.S., although some areas still experienced serious conditions. A December 19 article in The Wall Street Journal referenced Swiss Re data that suggests that 2025’s natural-catastrophe insured losses “are still within 5% of the prior 10-year, inflation-adjusted average annual loss.”  

Given these and other factors, rate pressure began to ease across parts of the Personal Insurance market, signaling a shift toward increased competition for high-quality risks. This helped improve carrier profitability. 

We expect improved availability of “blue-chip” paper in 2026, reducing reliance on unrated or government-backed options. Challenges remain for ultra-high-value homes and high-profile liability risks, but overall conditions are improving in both admitted and E&S markets. 

Continued advancements in technology and modeling 

Technology is a central consideration for brokers and agents managing their portfolios. 
Carriers and wholesalers are using advanced modeling to manage geographic concentration of risk across wildfire, convective storm, flood, and coastal exposures. This helps reduce surprise loss accumulation. 

Furthermore, modern catastrophe modeling is reshaping underwriting outcomes. For example, newer homes with strong risk-mitigation features receive more favorable treatment in CAT-exposed areas, which supports long-term pricing stability and profitability. 

Parametric – supplement for flood coverage 

As flood risk increases and deductibles rise, Parametric Insurance has become an effective tool for managing exposure. Unlike traditional Primary and Excess Flood coverage, Parametric Flood insurance pays out when a predefined trigger—such as measured water levels—is met rather than based on actual loss, providing faster and more certain payment. This approach is commonly used to offset or buy down Flood deductibles.  

Burns & Wilcox, the largest provider of Flood solutions in the E&S marketplace, recently launched an exclusive Parametric Flood offering in partnership with Atain Insurance Companies, an “A” rated (Excellent by AM Best) carrier, and Floodbase, a leading AI platform for monitoring and insuring flood risk. The solution is available across multiple sectors, including commercial property, cannabis, transportation, hospitality, and municipalities.  

The program delivers highly granular flood analytics for single or multiple locations using satellite data, IoT, artificial intelligence, and historical flood analysis. In addition to Parametric solutions, the Burns & Wilcox Flood Practice Group also offers direct-to-agent Flood quoting through its IssueQuick digital platform.  

Contributor: Bill Gatewood, Executive Vice President, Personal Insurance, Burns & Wilcox, Farmington Hills, MI

Commercial Insurance:

Commercial lines posted slower growth than in prior years as carriers prioritized profitability and early signs of rate softening moderated premium expansion. Social inflation, runaway jury verdicts, and third-party litigation funding continue to influence rate volatility and capacity across markets. 

Key segment trends include:   

• Property – Well-controlled, low-hazard risks may experience price declines and modest improvements in terms. CAT-exposed risks remain carefully underwritten, but negotiation opportunities extend beyond pricing alone to structure, limits, and deductibles. Carriers continue to emphasize accurate valuation and risk quality, particularly as inflation and weather volatility influence loss severity. 
• General Liability – Overall pricing is stable, though pockets of firmness persist—especially in Construction, Habitational, and other liability-heavy lines, and in specific geographic regions like New York. Litigation environment and loss severity remain central underwriting considerations, influencing terms, exclusions, and attachment points. 
• Excess – Pricing remains stable; however, nuclear verdicts and auto-heavy underlying exposures continue to create long-term uncertainty. 
• Cannabis – Regulatory complexity and federal illegality continue to push cannabis risks almost entirely into the E&S market. Rates and capacity remain variable, and insureds increasingly rely on specialized carriers and customized coverage structures. 
• Hospitality & Habitational – Litigation trends, assault-and-battery exposure, and firearms-related risks continue to pressure pricing and coverage terms. Exclusions, sublimits, and elevated deductibles are increasingly common, particularly for large venues and multifamily residential risks.
• Transportation – social inflation, litigation funding, repair costs, and driver shortages will limit rate relief. Capacity is shrinking, making submission quality, data accuracy, and timing critical. See the Transportation update later in the report for additional insights.  

While rates varied by geography—driven by tort reform, weather patterns, demand, and other regional factors—overall pricing showed signs of moderation. An influx of new market entrants increased competition, leading to more aggressive pricing and some market share shifting away from traditional carriers, particularly within the E&S segment. 

At the macro level, social inflation has added an estimated $200 billion in costs to the Commercial Insurance sector over the past 16 years, with little indication of near-term relief. A December 2025 Insurance Insider article noted that litigation funding is only one of several forces contributing to this trend. 

Against this backdrop, carrier selectivity remains a defining feature of the market. While some carriers tightened deployment in specific areas last year, overall capacity did not materially contract. Continued growth in the MGA segment has intensified competition while also expanding terms and conditions. 

As a result, many clients continue to rely on the E&S market, increasingly seeking customized coverage solutions unavailable in the standard market. This dynamic creates opportunities for brokers and agents to develop more tailored and creative approaches to meeting client needs.   

Contributor: Scott Higgins, Executive Vice President, Commercial Insurance, Burns & Wilcox, New York, NY

Professional Liability:

Most Professional Liability lines stayed competitive last year, with the notable exception of Sexual Abuse and Molestation (SAM) coverage, which remains one of the most challenging segments of the market. Capacity tightened and program structures continued to evolve, despite earlier expectations for broader market firming. Legislative changes—most notably the removal of statutes of limitation in certain states—are worsening the claims environment and are likely to further constrain capacity.  

In addition, long-term care facilities, particularly step-down homes that provide an intermediate level of acute care between hospitalization and traditional nursing homes, continue to face limited appetite due to elevated claim frequency and litigation pressure from social inflation and attorney-driven claims.  

Outside of these challenged areas, the broader Professional Liability market remained soft, supported by Excess capacity across most lines.  

• Errors & Omissions (E&O) continues to benefit from strong competition, limiting pricing movement despite evolving loss trends. 
• Directors and Officers (D&O) remains very soft; however, growing profitability concerns are emerging, driven by increased claims activity and loss severity. While pricing has continued to decline, underwriters are increasingly focused on risk selection and long-term performance. 
• Cyber pricing continues to remain competitive as capacity remains ample; however, rising claims frequency and severity are beginning to influence underwriting behavior and will alter the overall pricing trajectory. 

These competitive dynamics were reflected in rate performance across Professional Liability lines, which varied by coverage type. Cyber rates declined approximately 2.6%; D&O fell about 2.1%; and Employment Practices Liability (EPLI) remained soft with isolated pockets of firming. Miscellaneous Professional and Allied Health lines were largely flat and competitive. 

Looking ahead, Cyber is the Professional Liability line most likely to see rate increases in 2026. Rising loss frequency and severity—particularly from systemic events—combined with longer claim tails are creating gradual upward pricing pressure.  

An influx of new carriers and MGAs expanded capacity across Professional Liability lines, reinforcing competition and limiting broad-based rate increases for 2026 renewals. However, emerging profitability pressures—most notably rising severity, longer development tails, and increased frequency in Cyber—are expected to drive tighter underwriting discipline and greater pricing scrutiny going forward.  

A.I. sparking dialogue around coverage innovation 

A.I. is becoming a growing focus across the insurance industry as new exposures emerge that are not clearly addressed by traditional policy language. While A.I.-related risks are generally not affirmatively included under most standard policies, the market is still assessing how these exposures fit within existing coverage frameworks.   

Standalone A.I. coverage is unlikely in the near term, with A.I. exposures more likely to be addressed through definitions, endorsements, clarifications, or sub-limits within existing policies.    

This topic is expected to remain prevalent for the P&C sector, as A.I.-driven errors and unintended consequences can be costly for organizations. Burns & Wilcox recently profiled the adverse financial impact on Deloitte resulting from A.I.-influenced errors contained in a report created for the Australian government.  

Two general carrier approaches are emerging: some carriers are exploring more affirmative A.I. language or coverage considerations, while others are relying on existing policy language and limits as they monitor exposure and claims activity.  

The bottom line is that the A.I. space will continue to evolve, and the E&S market is expected to play a role in helping establish insurance options. Separating A.I. exposure from broader Professional and Management Liability products will take time, with careful policy language scrutiny remaining critical as the market develops. 

Contributor: Andy Wood, Vice President, National Professional Liability Practice Leader, Burns & Wilcox, Chicago, IL 

Transportation Insurance:

The Commercial Auto and Garage Insurance marketplace remains challenging as we enter 2026. Combined loss ratios continue above 100%, and underwriting discipline is expected to persist. Rate increases have now stretched across 55 consecutive quarters, with carriers maintaining firm pricing and a selective approach to risk. 

• Loss severity is rising due to inflation, nuclear verdicts, repair costs, supply-chain delays, and growing exposures from electric vehicles (EVs). 
• Regulatory enforcement of English-language proficiency for drivers intensified in 2025, worsening driver shortages and increasing scrutiny of B1 and Mexico-licensed drivers. 
• Garage Insurance opportunities are expanding, especially for mobile mechanics, heavy truck repair, and non-franchised dealers. 
• Capacity is available but selective. Complete submissions, strong safety culture, and telematics can improve pricing and options. 

Carriers are emphasizing proactive loss mitigation—telematics, cameras, documented hiring and training standards, and regular maintenance protocols are increasingly rewarded. Brokers and agents should educate clients on regulatory changes, review coverage regularly, and highlight unique operational details to secure competitive terms. 

Partnering with Burns & Wilcox and leveraging our expertise and broad market access remains essential for navigating complex risks and adapting to evolving market conditions. 

Contributor: Gene’ Cain, Broker, Transportation, Burns & Wilcox, Brokerage Division, Atlanta, GA

Environmental Insurance:

The Environmental Insurance marketplace enters 2026 with a cautiously optimistic outlook, shaped by regulatory pressures, emerging contaminants, and evolving risk management strategies. After several years of volatility, premium rates are stabilizing, with most lines experiencing modest increases. Contractors Pollution Liability (CPL) is expected to remain largely flat, with slight upward adjustments of up to 5%, while Site Pollution Liability (PLL/EIL) may see increases in the range of 0% to 10%. Combined programs that integrate Environmental coverage with Casualty, Professional, or Excess layers are projected to rise between 5% and 10%. These trends reflect a competitive marketplace where new carriers and expanded carrier appetite are cooling rate escalation despite rising claim costs. 

Capacity remains a critical theme in 2026. While the influx of new carriers and innovative products has eased pressure on primary layers, excess capacity continues to tighten, particularly in high-risk exposures such as Environmental Auto Liability in certain regions. This has led to reductions in available limits and, in some cases, non-renewals. Brokers and insureds are increasingly turning to layered programs across multiple carriers to manage pricing and maintain comprehensive coverage. 

From a growth perspective, the Environmental Insurance market is on a strong upward trajectory. Global estimates suggest the sector could approach $979.7 billion in 2026. The green insurance niche—covering eco-friendly and sustainability-focused products—is expected to grow even faster, fueled by Environmental, Social, and Governance (ESG) mandates and consumer demand for environmentally responsible solutions. 

Several factors are contributing to this growth. Regulatory tightening and enforcement of environmental standards remain primary drivers, alongside heightened ESG transparency requirements and investor pressure for sustainable practices.  

In summary, 2026 marks a period of steady growth and transformation for Environmental Insurance. While premium increases are moderate, the market is characterized by expanding capacity, innovative product development, and heightened attention to emerging contaminants. For agents, brokers, carriers, and insureds alike, success will hinge on partnering with knowledgeable Environmental Insurance professionals, proactive risk management and strategic layering of coverage. The long-term outlook is robust, with Environmental Insurance positioned as a critical component of global risk management strategies in an era of increasing environmental accountability. 

Contributor: Beth Linton, Vice President, Environmental Brokerage, Burns & Wilcox, Brokerage Division, Atlanta, GA

REINSURANCE MARKET UPDATE

Property reinsurance pricing softened more than expected during the January 1 renewal cycle. U.S. property CAT excess-of-loss rates declined 12–15%, exceeding initial market expectations. This can be attributed to abundant capacity and oversubscribed placements. 

Several years of relatively limited CAT losses have resulted in strong returns and continued flow of capital into the property reinsurance market. As a result, further softening is emerging in E&S property pricing, and we expect continued rate decreases in 2026. 

A positive for property reinsurers, insurer retentions generally held stable in this renewal cycle, which is notable given that insurer retentions had been pushed up significantly over the past few renewal cycles. 

Casualty reinsurance remained stable but segmented. Unlike property, which experienced meaningful softening, casualty pricing largely held firm. Outcomes varied by account composition and quality, with well-performing portfolios achieving improved terms, while auto-heavy or distressed General Liability exposures continued to face pressure. 

We did see increased reinsurance capacity in the January reinsurance renewals, driving some casualty placements to be oversubscribed. Well-performing accounts did achieve moderate rate decreases and increased ceding commissions in some cases. Despite the increased capacity, reinsurers still express underlying concerns with the US casualty market, so broad-based softening across the market appears unlikely. 

Contributor: Chris Zoidis, President and Chief Executive Officer, Atain Insurance Companies, Farmington Hills, MI

LONDON MARKET UPDATE

Property  

The 2025 Property market was a year of transition. Key developments include softening rates and strategic shifts within the London market. With the 1/1 reinsurance negotiations for 2026 underway, U.S. Property Cat buyers are expected to benefit from further increased rate flexibility, with rate reductions projected at 15-20% for the forthcoming year. Stamp capacity growth has slowed for many major syndicates, signaling more caution as we enter the new year. Meanwhile, investment in technology continues to be a significant focus, and within the London market a rise of cross-class facilitation remains a central theme. Lloyd’s CEO Patrick Tiernan reported 50% growth in cross-class facilities, highlighting a trend toward streamlined placement and efficiency.  

Last year began with significant wildfire losses in California, estimated at $40–50bn, followed by an extremely benign U.S. storm season with no major hurricanes making landfall. This favorable catastrophe environment has accelerated rate reductions throughout the second half of the year and is expected to continue into 2026. Coastal states are experiencing the greatest pressure on rating, driven by both local and London markets competing aggressively for business. 

Looking ahead, while market conditions suggest continued softening, success will depend on disciplined underwriting and strong strategic partnerships. Technology-driven efficiencies and innovative facility structures will play an increasingly important role in sustaining growth and profitability. Maintaining underwriting rigor and adapting to evolving market dynamics will be critical as we navigate the challenges and opportunities of 2026. 

Contributor: Kerry Hall, Head of Burns & Wilcox Lloyd’s Products, Burns & Wilcox Global Solutions, London, UK   

Casualty    

Q4 2025 signaled a shift toward a softer phase. Lloyd’s warned that Casualty price adequacy is “probably insufficient,” even as Property rates fell and Cyber growth ambitions accelerated; management emphasized maintaining long‑term return hurdles amid narrowing margins and a more competitive distribution landscape (facilities, structured solutions). Independent commentary echoed this, noting that rate alone cannot be relied upon—discipline around terms, attachment points, and portfolio selection is central as follow‑market models face pressure from facilitation and broker structures. At a macro level, AM Best revised its London Market outlook to stable, citing signs of softening and persistent social inflation risk, albeit supported by higher investment yields and ongoing demand from U.S. E&S lines.   

Casualty pricing/placement in London

By late‑2025, Primary Casualty was broadly competitive, with General Liability (GL) increases moderating and Workers’ Compensation typically flat, while Auto Liability remained elevated due to claims severity and repair complexity (including EV battery issues). Excess/umbrella towers showed continued diligence—lower layers and loss‑affected accounts seeing high single to low double‑digit moves, but with stabilization compared to the 2023–2024 peaks; carriers remained wary of auto exposure and attachment points. Overall, capacity was available, yet it often required more markets to complete limits, and incumbents increasingly traded margin to retain positions on clean accounts.  

Bermuda Casualty

Bermuda entered Q4 with firmer pricing, but signs of moderation: low‑hazard risks achieved flat to +6%, while high‑hazard or loss‑affected exposures remained +5% to +20%, supported by disciplined underwriting and selective capacity growth. Indications point to appeals tempering nuclear verdicts and to an expected “Class of 2026” of new carriers, which could broaden appetite at various attachment levels and occupancies.  

Spring 2025 updates had already highlighted litigation inflation and constrained capacity as persistent drivers for casualty—conditions that have eased only on cleaner accounts. 

Capital & renewal dynamics into 2026
Balance sheets remained strong: Bermuda (re)insurers posted robust returns despite a higher combined ratio (~90% for 2024) and rising catastrophe loss contributions; market pricing passed its peak, but underwriting discipline and alternative capital (ILS) underpin resilience. January 2026 renewals suggest an orderly market with moderating Property‑CAT rates and largely intact terms; third‑party capital rose and sidecars extended beyond property—supporting flexible capacity deployment across specialty and, selectively, Casualty. For London, Lloyd’s projects 2026 growth with a 91.2% target net combined ratio but reiterates that sustainable profitability hinges on careful monitoring of price adequacy and the evolving battle for distribution facilities and structured solutions. 

Trends heading into 2026
Expect continued rate moderation and broader capacity for clean Casualty risks, counterbalanced by pressure on auto‑related segments and higher‑hazard classes (Construction, Habitational) where severity persists. As mentioned in last quarter update, structured solutions and multi‑year deals will expand for preferred risks (especially in Bermuda), while London will see facility‑led placements grow, challenging pure follow models and rewarding underwriters and brokers who articulate differentiated value. Social inflation and litigation funding remain watch‑items; however, appeals dampening nuclear verdicts, and new entrants suggest a more stable—but still disciplined—Casualty landscape. 

Contributor: Declan Durkan, Managing Director, Non-Marine, Burns & Wilcox Global Solutions, London, UK 

CONCLUSION

The E&S marketplace remains resilient following the unusual conditions of 2025, extending its streak of premium growth to 14 consecutive years. Casualty lines now account for the majority of E&S premiums. Despite pressure from social inflation, nuclear verdicts, and litigation funding, carriers have preserved profitability through disciplined underwriting, reserve management, and favorable tort reforms in states such as Florida and Georgia. 

Technology and innovation are increasingly central to underwriting and risk management strategies. Advances in catastrophe modeling, alternative inspection methods, Parametric solutions, and clearer policy language for emerging risks—such as artificial intelligence—are helping carriers manage volatility. At the same time, ample capacity and moderate rate softening across commercial and personal lines are improving market access and coverage quality. 

Looking ahead to 2026, the outlook is cautiously optimistic, with expectations for continued expansion, competitive but sustainable pricing, and a more predictable operating environment. While challenges persist, the E&S sector’s adaptability, regulatory improvements, and technological integration position brokers, agents, and carriers for steady growth and effective responses to evolving client needs. 

Contributor: Paul G. Smith, Group Senior Vice President, H.W. Kaufman Group, New York, NY 

Disclaimer: The above information has been prepared solely for the purpose of sharing general information regarding insurance and business practice management issues. These are just our opinions and are not intended to constitute legal advice or a determination on issues of coverage.