The US property and casualty (P&C) insurance industry will likely see underlying growth fall to -3.7% in the first half of 2026, down from 2025’s tally of 1.6%, with insurers continuing to contend with catastrophe exposure, inflationary pressures and rising claims costs, stated the Insurance Information Institute (Triple-I), along with actuarial and consulting firm Milliman.
In their latest briefing, “P&C Economics and Underwriting Projections: A Forward View”, Triple-I and Milliman said although industry recovery is expected in 2027 and 2028, insurers will likely remain under pressure from economic uncertainty and elevated loss trends.
“The organisations also forecast replacement cost growth of 2.1% during the first half of 2026, unchanged from 2025 levels. While replacement-cost inflation has moderated from peaks seen in 2022, Triple-I and Milliman expect costs to accelerate again through 2028 and eventually rise faster than overall US inflation,” the report noted.
“Despite the more difficult outlook for 2026, the industry recorded stronger underwriting performance in 2025. The net combined ratio (NCR) fell to its lowest level in more than a decade, reflecting improved conditions across several major lines after years of severe catastrophe losses, inflation-driven claims inflation and post-pandemic market disruption,” Triple-I and Milliman observed.
“The industry’s 2025 results should be viewed in the context of the significant financial strain insurers have faced in recent years. Although conditions have stabilised somewhat, insurers continue to operate in an environment marked by elevated catastrophe risk, higher claims severity and ongoing economic uncertainty,” commented Michel Leonard, Chief Economist and Data Scientist at Triple-I.
“Real GDP growth slowed to 2.0% in the first quarter, while consumer price index inflation remained elevated at 3.3% in March, remaining above the Federal Reserve’s long-term target. Insurance employment declined 1.8% year-over-year in March, underperforming the broader labour market and reflecting continued weakness in sector employment conditions. Meanwhile, higher energy prices and persistent inflationary pressures continue to strain household and business finances,” he added further.
Personal auto insurance continued its recovery journey during 2025, with the NCR improving by 3.5 points year-on-year to 91.8. Net written premium growth slowed to 4.0%, its lowest level since 2021, although underwriting conditions may remain favourable into 2026.
The report also noted improved homeowners’ insurance results despite ongoing catastrophe activity, including the Los Angeles wildfires earlier in 2026. The homeowners’ NCR for 2025 reached 88.1, marking the strongest underwriting performance in more than ten years, supported by tailwinds like easing replacement-cost pressures and earlier pricing actions.
As per Triple-I and Milliman, the P&C insurance industry’s profitability pressures remain concentrated in several commercial lines.
“General liability and commercial auto are expected to remain the only major lines above a 100 NCR through 2026, although gradual improvement is forecast over the next several years,” the organisations noted.
Jason B. Kurtz, Principal and Consulting Actuary at Milliman, said both segments would continue to face significant challenges linked to litigation and claims severity.
“Litigation pressures and claims severity trends continue to result in elevated loss costs, constraining improvement in these segments despite broader industry strength,” Kurtz said, while noting that workers’ compensation will likely remain one of the strongest-performing lines from 2026 to 2028, with Triple-I and Milliman projecting combined ratios in the low 90s, indicating sustained underwriting profitability.
“Replacement costs moderated significantly from their 2022 peak, but our forecasts show them re-accelerating through 2028 and eventually outpacing overall US inflation. While underwriting conditions have strengthened in some property lines, the industry faces a challenging road ahead with elevated catastrophe exposure, economic uncertainty and persistent claims-cost pressures,” said Patrick Schmid, chief insurance officer at Triple-I.