Heading into 2026: State of the Insurance Market
By ISC
ISC Market Report: An Executive Summary
This ISC market report reviews the U.S. insurance landscape heading into 2026.
- Property markets are softening with growing capacity.
- Casualty and Liability lines (especially general and commercial auto) remain under strain from social inflation and rising claim severity.
- Excess Liability and Contractor’s coverage lines face tighter underwriting, while Workers’ Comp remains stable.
- Agents can best support clients by providing full, transparent submissions, emphasizing loss prevention, and leveraging the flexibility of the E&S market through partnerships like ISC.
As 2025 winds down, let’s take a look at the state of the insurance market and how several lines of business are faring. There appear to be two distinct markets: one in which the Property market is stabilizing, even softening, and the other where the Casualty market continues to face headwinds.
Property Market
Commercial Property insurance, which has experienced years of a hard market, is now favorable for buyers, with ample capacity and competition in pricing and structure. This “softening” market is expected to continue, barring any significant catastrophic losses as we close out the year. The hurricane season has been relatively muted so far, with some activity occurring in late September and early October. While reinsurers are well positioned to handle significant losses, the frequency and severity of severe convective storms and wildfires continue to pose a risk to the overall market. Global losses from wildfires and severe thunderstorms reached $80 billion in the first half of 2025, according to Swiss Re Institute’s preliminary estimates.
The Excess and Surplus (E&S) market continues to see growth for high-risk accounts as admitted carriers pull back in certain areas.
On the personal lines side, the cost of Homeowners insurance continues due to continued inflation and extreme weather losses, particularly in certain areas; however, the market is showing signs of stabilization and increased competition.
General Liability
The General Liability insurance market remains challenging, although rates aren’t rising at the same level as in prior years. Social inflation is a major driver of costs, with an increasing number of lawsuits and nuclear verdicts ($10 million and above) continuing to gain traction. In fact, just 56% of respondents believe there are too many lawsuits in the U.S. This represents a sharp decline from 90% in 2016 and signals a major shift in perception, with lawsuits increasingly viewed as a legitimate tool for exacting justice, according to Swiss Re's 2025 Behavioral Social Inflation Study.
According to the study, support for larger awards has also followed suit, with 76% of respondents indicating that damages awarded in lawsuits are either too low or just right, up from 58% in 2016. This change reshapes the mindset in the courtroom, with jurors often beginning deliberations under the assumption that current compensation levels fall short. As a result, larger awards not only feel acceptable but are anticipated.
Commercial Auto
The Commercial Auto Liability insurance market is expected to remain relatively firm. According to a recent AM Best report, the Commercial Auto Liability market in the U.S. continues to burden the overall P&C industry, accounting for more than $10 billion in net underwriting losses over the past two years.
The report states that the “segment’s rising loss severity, increasing claims costs, and adverse prior-year loss reserve development continue to produce net calendar year underwriting losses for commercial auto insurers.”
The Commercial Auto insurance sector has now generated an underwriting loss for the 14th consecutive year, according to AM Best. Losses are actually getting worse. In 2024, there were $4.9 billion in total underwriting losses, whereas over the past 11 years, the average annual underwriting loss has been approximately $2.9 billion.
Excess Liability
Excess Liability insurance, particularly in certain industries such as transportation and habitational, also continues to face challenging conditions, with rates rising. Due to the severe impact of social inflation and large verdicts, insurers are carefully scrutinizing risk, especially on upper layers. Many are reducing the maximum capacity offered on individual risks.
Contractor’s Equipment
The insurance market for Contractor’s Equipment coverage is holding steady and remains competitive, especially for accounts with a clean loss history. Theft remains the biggest headache.
Contractor’s Professional & Pollution Liability
Contractor’s Professional and Pollution Liability are also in a stable spot, with plenty of capacity available. On the Professional Liability side, how a project is delivered really matters: progressive design-build is looked at favorably, while lump-sum contracts tend to draw more scrutiny.
Contractor’s Pollution Liability remains attractive to carriers. PFAS exclusions are beginning to appear in some cases, primarily on owned sites; however, for most contractors, these placements are still moving ahead smoothly.
Workers’ Compensation
Workers’ Comp remains stable, although underwriters are closely monitoring the impact of medical inflation, claims severity, and social inflation moving forward.
How Agents Can Help
At ISC, we recommend that agents help clients better position themselves by providing a complete picture of their risk profile during the submission process, including a business’s financial strength, safety culture, claims history, and measures taken to mitigate future losses. Providing thorough and accurate information up front can be the difference between a difficult renewal and securing favorable policy terms.
Agents should also emphasize the critical value and impact that loss control and risk management have on an insurance program with their clients. Demonstrating proactive steps, such as implementing fleet safety programs and contractual risk transfer, can go a long way in earning underwriter confidence.
Equally important is creativity. Many agents are finding better solutions for their clients by tapping into the growing E&S market, where capacity and flexibility often provide answers for risks that admitted carriers are reluctant to take on.
Agents who work with partners like ISC, which have strong E&S programs, can open doors to lines of business and niche markets that are more challenging in the admitted market. ISC, for example, offers a Homeowners program that fills the gaps in key middle market segments, insuring everything from HO3 to seasonal and secondary homes, Airbnbs, tenant-occupied properties, vacant properties, and others. Our Investor Property Program, designed for owners of one- to four-family rental properties, gives agents a streamlined solution for reliable, flexible coverage across a client’s entire portfolio. ISC’s Construction General Liability program is designed for contractors of all sizes and trades, and our Contractor’s Pollution Liability product fills in liability gaps.
Heading into 2026, agents with strong, comprehensive submissions that emphasize loss prevention, along with the ability to navigate the E&S marketplace effectively alongside their partners, are best positioned to deliver stability and value to their clients.
Visit ISC/Smart Choice to learn more about ISC’s specialty programs – including exclusive offerings available to Smart Choice agents.