USI: "2026 Commercial Property & Casualty Market Outlook" Highlights Shifting Risk Dynamics

USI Insurance Services' 2026 Commercial Property & Casualty Market Outlook provides an assessment of evolving pricing, capacity, and underwriting conditions across major commercial insurance lines, drawing on insights from USI's national practice leaders to evaluate developments since 2025 and expectations for early 2026.

According to USI, the property insurance market benefited from a lower-than-anticipated catastrophe loss environment in the latter half of 2025, as major hurricanes failed to materialize in the United States, easing pressure on global insured catastrophe losses despite elevated loss activity earlier in the year.

The report indicates that property renewals during the second half of 2025 reflected improving conditions, with single-insurer placements frequently achieving flat to single-digit rate reductions, while shared and layered programs experienced larger decreases, particularly for accounts with favorable risk profiles and loss histories.

USI notes that strong capital inflows into the reinsurance market—including record levels of alternative capital—have supported ample capacity, contributing to competitive treaty renewals and reinforcing expectations for continued rate softening in the property market through the first half of 2026.

Valuation pressures remain a concern, according to the report, as replacement costs stayed elevated due to lingering inflation, labor shortages, and supply-chain constraints, with commercial reconstruction costs in the United States still rising year over year as of mid-2025.

On the casualty side, USI reports that market conditions stabilized for many insureds in 2025, though segmentation intensified, with higher-risk industries and accounts with adverse loss histories facing stricter underwriting and continued rate pressure, particularly in automobile liability.

The report identifies social inflation as a persistent driver of claim severity and reserve development, especially affecting auto liability, umbrella, and excess lines, while increasingly influencing smaller fleets and middle-market accounts.

Workers compensation remained a comparatively profitable line, according to USI, supported by declining claim frequency and competitive market capacity, although certain states—most notably California—experienced rate increases tied to rising medical and cumulative trauma costs.

Internationally, USI states that commercial insurance markets remained largely stable entering 2026, with modest rate movements outside catastrophe-exposed regions, while geopolitical uncertainty, regulatory complexity, and supply-chain disruptions continued to shape underwriting considerations.

The environmental insurance market continued to evolve, per the report, with heightened regulatory scrutiny, increased litigation related to emerging contaminants, and expanding interest in integrated casualty and pollution products, even as competitive conditions persisted for many insureds.

USI reports that aviation insurance remained buyer-friendly through 2025, supported by new underwriting capacity, although rising repair costs, supply-chain challenges, and social inflation introduced longer-term concerns for underwriting profitability.

Executive and professional liability markets showed overall stability, according to USI, while underwriters became more cautious in response to economic uncertainty, rising bankruptcies, cyber-related risks, and litigation funding trends affecting claim frequency and severity.

Across industries, the report highlights growing use of data analytics, telematics, and risk modeling tools to address climate volatility, cyber exposure, and liability severity, reflecting insurers' increasing reliance on granular risk assessment to inform pricing and coverage decisions.

Looking ahead, USI concludes that early 2026 is likely to be characterized by continued competition in many commercial lines, tempered by ongoing underwriting discipline, valuation scrutiny, and the sustained influence of social inflation across casualty exposures.