Rising Costs, Slowing Premiums: Why AM Best Predicts a Tougher 2026 for the P/C Insurance Market

Insurance financial analysis

After a relatively strong 2025 for the property/casualty insurance sector, AM Best is signaling a shift. According to new analysis reported by Insurance Journal, the industry may be facing a more challenging 2026 driven by slowing premium growth, inflationary pressure, and rising claims costs.

Premium Growth Slows as Rates Plateau

The momentum seen in 2025—supported by strong investment income and previous rate hikes—is starting to cool. AM Best’s latest industry report forecasts slowing net premium growth across many lines in 2026. This softening trend is expected to push the industry’s combined ratio up by 1.9 points to 96.9.

From cyber to D&O to commercial property, renewal pricing softened throughout 2025—and the trend appears likely to continue. Even workers’ compensation, traditionally a stable performer, saw its premium growth moderate last year.

Inflation Hits Claims Costs Hard

Jacqalene Lentz, Senior Director at AM Best, notes that rising prices for construction materials, auto parts, and commercial repair costs are pushing loss ratios higher. These macroeconomic pressures are cutting into the cushion insurers regained in 2025.

Even personal lines—which benefited from rate approvals and tech‑driven underwriting improvements—may feel pressure again in 2026. Higher auto fatality rates and increasing repair costs remain persistent challenges.

Commercial Lines Feel the Strain

Commercial lines are projected to reach a combined ratio of 96.3 in 2026—slightly worse than 2025’s 95.8. Auto, medical professional liability, and products liability each recorded combined ratios over 100 in 2025, indicating underwriting losses and ongoing stress.

Reserves: A Persistent Risk

AM Best’s re‑estimation of ultimate reserves revealed a $9 billion deficiency for year‑end 2024. While improved from earlier projections, reserve adequacy remains a major concern—and one of the clearest indicators of long‑term company solvency.

E&S Market Continues to Shine

As admitted carriers tightened underwriting or stepped away from volatile classes such as property and high‑hazard liability, the excess & surplus (E&S) market absorbed the overflow. AM Best calls this shift one of the defining forces of 2025—a trend expected to influence 2026 as well.

What This Means for Insurance Professionals

Whether you’re licensed or exploring a path into the industry, these shifts highlight the importance of staying skilled, informed, and adaptable. A year of flatter rate changes and rising claims severity means professionals will need sharper analysis, stronger risk‑evaluation skills, and a deep understanding of evolving market pressures.

If you’re considering entering or advancing within the insurance field, Cameron Academy provides flexible, career‑focused licensing programs designed to help professionals stay ahead of market changes and elevate their expertise.

To dive deeper into the original reporting, visit the full article on Insurance Journal.

More Articles

Getting licensed or staying ahead in your career can be a journey—but it doesn’t have to be overwhelming. Grab your favorite coffee or tea, take a moment to relax, and browse through our articles. Whether you’re just starting out or renewing your expertise, we’ve got tips, insights, and advice to keep you moving forward. Here’s to your success—one sip and one step at a time!

Telehealth, Patient Reviews, and Retailization – 2024 Healthcare Digital Marketing Trends

The healthcare industry is undergoing a significant transformation, marked by rapid growth and innovation. By 2028, the global healthcare market is expected to reach a staggering $665.37 billion, while national healthcare spending is projected to soar to $5.7 trillion by 2026.

By |November 18, 2024|Categories: Article, Digital Marketing Trends, Healthcare|Tags: , |0 Comments

Climate Change and the Insurance Industry: A Growing Crisis

"Insurance is where many people are feeling the economic impacts of climate change first."

Adapting Glaucoma Training and Treatment: Insights from the Orbis Flying Eye Hospital

In underserved regions, innovative approaches are empowering local medical teams by enhancing surgical skills, implementing early detection protocols, and integrating telemedicine advancements to prevent blindness.

By |November 17, 2024|Categories: Article, Healthcare, Medical Training|Tags: , |0 Comments

ETH Zurich’s Impact Printing: A Breakthrough in Sustainable Construction

The innovative team at ETH Zurich is making waves in the construction world with their new method, Impact Printing. This groundbreaking technique utilizes Earth-based materials, such as sand, silt, clay, and gravel, to construct environmentally friendly structures.

Healthcare Leaders Navigate AI Revolution

Healthcare needs to embrace artificial intelligence,” stated Dr. Gianrico Farrugia, President and CEO of Mayo Clinic, who also serves on a National Academy of Medicine panel working on a code of conduct for AI use in healthcare.

By |November 17, 2024|Categories: Article, Healthcare, Technology|Tags: |0 Comments

Central Bank Digital Currencies: Bridging Innovation and Stability

CBDCs represent the next step, aiming to modernize financial services to be more resilient and inclusive. As digital currencies become more integrated into the global financial system, they may offer a more inclusive and efficient financial framework but will require careful implementation to balance innovation with stability.

By |November 16, 2024|Categories: Article, Finance, Technology|Tags: , |0 Comments