The US property and casualty (P&C) insurance industry is projected to see underlying growth fall to -3.7% in the first half of 2026, down from 1.6% in 2025, as insurers continue to contend with catastrophe exposure, inflationary pressures and rising claims costs, according to new forecasts from the Insurance Information Institute (Triple-I) and actuarial and consulting firm Milliman.
In their latest briefing, P&C Economics and Underwriting Projections: A Forward View, Triple-I and Milliman said recovery is expected in 2027 and 2028, although insurers are likely to remain under pressure from economic uncertainty and elevated loss trends over the coming years.
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.
Despite the more difficult outlook for 2026, the industry recorded stronger underwriting performance in 2025. Triple-I and Milliman reported that the sector’s 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.
“The industry’s 2025 results should be viewed in the context of the significant financial strain insurers have faced in recent years,” commented Michel Léonard, Ph.D., CBE, Chief Economist and Data Scientist at Triple-I. “Although conditions have stabilised somewhat, insurers continue to operate in an environment marked by elevated catastrophe risk, higher claims severity and ongoing economic uncertainty.”
Triple-I also pointed to broader economic conditions affecting the sector. “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,” Léonard added. “Insurance employment declined 1.8% year-over-year in March, underperforming the broader labor market and reflecting continued weakness in sector employment conditions. Meanwhile, higher energy prices and persistent inflationary pressures continue to strain household and business finances.”
According to Triple-I and Milliman, personal auto insurance continued its recovery 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 are expected to remain favourable into 2026.
The organisations also reported improved homeowners insurance results despite ongoing catastrophe activity, including the Los Angeles wildfires earlier in the year. The homeowners NCR for 2025 reached 88.1, marking the strongest underwriting performance in more than ten years, supported by easing replacement-cost pressures and earlier pricing actions.
Triple-I and Milliman said 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.
Jason B. Kurtz, FCAS, MAAA, Principal and Consulting Actuary at Milliman, said both segments 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.
Workers’ compensation is expected to remain one of the strongest-performing lines through 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,” said Patrick Schmid, Ph.D., chief insurance officer at Triple-I.
“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.”
Separate figures from NCCI also pointed to continued pressure on underwriting expenses. “The preliminary reported combined ratio for calendar year 2025 is 91, an increase of about 5 points from the prior year,” added Donna Glenn, Chief Actuary at NCCI. “The change is primarily due to an increase in the loss and underwriting expense ratios.”
