2026 P/C Market Forecast: Competition Rises, Combined Ratios Improve, AI Expands

Analysts are sketching a 2026 property/casualty market that is easing overall, but with casualty still behaving like its own cycle. Fitch points to increased competition, abundant capital, and downward pricing pressure across U.S. P/C, plus a softer property-cat reinsurance tone heading into midyear renewals. Morningstar’s view is that casualty remains attractive because carriers still have room to push rate where loss trends and litigation demand it, even if the rest of the market cools.

For claims leaders, the key takeaway is the ‘two-speed’ market: property pricing may moderate while liability, excess casualty, and commercial auto stay firmer. That split matters for reserving posture, vendor strategy, and how aggressively carriers will pursue severity controls. It also sets expectations for scrutiny on files tied to social inflation drivers, venue risk, and attorney involvement, especially in casualty lines where pricing is expected to remain divergent.

Early results from a cohort of large North American insurers show underwriting profitability holding up, with combined ratios improving year over year for 2025 and most reporting below breakeven. The story suggests momentum is strongest where carriers have diversified books and strong small commercial or specialty capabilities. On the flip side, it highlights competitive pressure in certain property placements (shared-and-layered large accounts, some E&S property), plus selective pullbacks in areas where risk-reward looks misaligned.

Company commentary reinforces themes adjusters should watch in 2026. AXIS points to specialty growth, disciplined cycle management, and continued caution in cyber and some liability-heavy reinsurance where ransomware, MGAs, and pricing adequacy concerns collide. The Hartford frames its next phase as ‘AI-first,’ with practical applications already touching claims record summarization and contact center workflows. Selective emphasizes underwriting profit over growth, ongoing reserve attention in commercial and personal auto, and continued tech investment that may lift expense ratios near-term while aiming to reduce labor intensity over time.

Bottom line for the claims community: expect more competition and pricing pressure in parts of property and reinsurance, continued firmness in casualty-linked lines, and accelerating use of AI in claims handling. That combination typically increases expectations for speed, documentation quality, leakage control, and consistency across adjuster teams, even as carriers try to avoid competing away the underwriting gains they just earned.