Fitch Ratings, the credit rating agency, expects the US property and casualty (P&C) insurance market to face continued softening through 2026.
According to the analysis, the US P&C insurance market is set to become more competitive in 2026, with abundant capital and easing pricing continuing to weigh on premium growth.
As rate momentum slows amid broader macroeconomic uncertainty, insurers are likely to see decelerating revenue growth. Even so, Fitch notes that stronger personal lines results and solid commercial lines performance should help underpin stable financial outcomes and continued underwriting profitability.
Fitch Ratings maintains a ‘deteriorating’ sector outlook for global reinsurance in 2026, citing moderately weaker operating and business conditions expected over the year.
Statutory performance for P&C insurers benefited in 2025 from a relatively mild US hurricane season and elevated reserve releases, Fitch Ratings reports. Global insured natural catastrophe losses reached USD 108 billion in 2025, well below the USD 147 billion recorded in 2024 and under the five-year average of USD125 billion. Losses were broadly in line with the 10-year average of USD 107 billion, based on data from Munich Re’s NatCatSERVICE, as referenced by Fitch.
Fitch Ratings highlights that the most significant insured loss event of 2025 was the Los Angeles, California wildfires, which generated USD 40 billion in insured losses and USD53 billion in total economic losses—making it the costliest wildfire event in US history. By contrast, the 2025 Atlantic hurricane season was notably subdued, with none of the five hurricanes making US landfall, a first since 2015.
Commercial lines insurers were largely insulated from the California wildfire losses that affected US primary carriers. Fitch Ratings notes that regional and mutual insurers retained most of the losses, as individual events were insufficient to trigger many excess-of-loss reinsurance programs. This reflects reinsurers’ continued pullback from higher-frequency catastrophe exposures.
Fitch projects that the US commercial lines sector will post an aggregate combined ratio of around 94% for 2025. Underwriting profitability is expected to narrow modestly in 2026, with combined ratios drifting to 96%–97%, assuming catastrophe activity returns to more typical levels.
In personal lines, Fitch Ratings expects homeowners’ insurance results to remain supported by prior rate increases and tighter policy terms, which have improved combined ratios. For private passenger auto, the pace of rate increases is forecast to slow further but remain positive into 2026.
Reinsurance pricing softened materially at the January 2026 renewals, following declines already seen at mid-year 2025, Fitch Ratings reports. Risk-adjusted prices fell across most property catastrophe lines. Rate reductions of up to 5% were observed for US and European catastrophe-exposed portfolios. For loss-free US property business, pricing declines reached as much as 20%, compared with a range of down 10% to up 10% a year earlier. European property pricing also fell by up to 20% for loss-free accounts, versus a range of down 15% to up 5% in 2025.
Fitch Ratings expects this trend to continue through the mid-year 2026 renewals, including April renewals focused on Asia and the June/July Florida renewals. Strong capacity levels and heightened competition are likely to drive further gradual price erosion and more flexible terms, particularly in property lines, unless major loss events occur. Fitch adds that competitive behavior remains disciplined, with loss ratios still benefiting from favorable claims frequency patterns.
While severe hurricanes and other natural disasters remain a key source of volatility for P&C insurers, Fitch Ratings believes the sector is well capitalised to withstand large single-event losses. However, a cluster of significant catastrophe events within a short timeframe could pressure capital positions and lead to negative rating implications.
Overall, Fitch Ratings assigns a ‘neutral’ fundamental sector outlook for the US P&C insurance market in 2026, covering both commercial and personal lines. In contrast, Fitch’s ‘deteriorating’ outlook for global reinsurance reflects expectations that operating and business conditions will weaken for reinsurers worldwide over the coming year.
