News
US P/C Insurance Underwriting Profitability Strong Despite Headwinds
The U.S. property/casualty’s (P/C) ‘neutral’ sector outlook for 2026, including commercial and personal lines, is supported by expectations for continued strong overall statutory performance seen in 2025 that benefitted from a benign hurricane season, outsized favorable reserve development, and strong personal auto results, Fitch Ratings says.
However, pricing discipline, reserve adequacy, and claims management will be challenged by increasing competition, geopolitical uncertainty, slowing economic growth and a challenging legal environment. Reserve adequacy in longer tail casualty lines remains a central concern. Large settlements and verdicts, as well as litigation abuse, continue to exert upward pressure on claims severity and pricing across commercial auto, general liability, and umbrella.
Business conditions should remain mostly unchanged in 2026 with resilient capital and continued, although softening, profitability. We expect the 2025 industry combined ratio to improve by 3 percentage points yoy to 94%. Insurers’ profitability benefited from $18 billion of positive reserve releases through 9M25, nearly double from the prior year’s level.
Fitch forecasts a 96%-97% combined ratio for 2026, reflecting a more normalized hurricane season and lower favorable reserve development. Results will be driven by continued strong performance across both personal and commercial lines, despite headwinds that will challenge top-line growth. Declining interest rates are expected to modestly pressure net investment income, though book yields are expected to remain strong. The adjusted industry return on surplus is projected at 10.1% in 2025 and 9.1% in 2026.
Commentary/Opinion
AI, Litigation Funding and Market Crosscurrents: What CM Readers Cared About in 2025
As 2025 unfolded, Carrier Management readers gravitated toward features that explored the intersection of technology, economics, and strategy.
From artificial intelligence transforming underwriting to litigation funding reshaping claims costs, and regulatory shifts redefining market dynamics, here are the 10 most-viewed articles of the year.
(Editor’s Note: This article was written with the help of AI tools, corrected by a human editor. See related article: Carrier Management’s 2025 Top Features)
Executive Summary
From AI-powered underwriting to litigation funding’s ripple effects and personal lines optimism, Carrier Management presents 10 of the stories that captured readers’ attention in 2025.
How AI is Orchestrating the Insurance Supply Chain - with Marc Fredman of CCC Intelligent Solutions - Emerj Artificial Intelligence Research
Modern vehicles are increasingly equipped with advanced technologies, including AI-powered sensors, image-based diagnostics, and automated damage detection, which enable faster and more accurate claims assessments.
Recent research from Helwan University, Cairo, presents an academic Cost Estimation System that combines computer vision models with structured customer data to assess vehicle damage severity and estimate repair costs, illustrating the potential of these advanced technologies to accelerate claims processing and mitigate fraud risk.
At the same time, the research highlights ongoing challenges in integrating heterogeneous data sources, standardizing damage classifications, and operationalizing AI outputs within complex insurance workflows.
According to CCC Intelligent Solutions Holdings Inc.’s 2025 Form 10-K filed with the SEC, automotive claims in the U.S. now account for approximately two billion cumulative days of claims cycle time annually, reflecting the growing operational complexity facing insurers and underscoring how rising complexity continues to strain claims operations even as insurers invest in AI-enabled workflows.
Marc opens the conversation by saying that claims teams succeed only when they balance three things at once: FULL ARTICLE
- Accurate payouts
- Operational efficiency
- Strong customer experiences
Marc Fredman, Chief Strategy Officer, CCC Intelligent Solutions
What tech startups get wrong about insurance
For many tech startups chasing big-name clients, the first major enterprise contract can deliver an unexpected blow – not in the sales pipeline, but in the insurance clause. “They’re three years into the business... and that first MSA hits,” said Joseph Cook (pictured), founder of The Arizona Group’s tech and cyber liability practice.
With that one master service agreement, a bare-bones insurance policy purchased online for $600 a year suddenly has to become a robust, multi-layered program worth $45,000 or more. “
To be compliant with T-Mobile’s MSA, or Ingram Micro’s MSA... it could be $45,000 a year or more worth of insurance,” Cook explained. “But their perspective against what is fair in the market has been skewed by the previous artificial program... they’re now a $10 million company. So, this is half a percent of insurance cost which is well within benchmarking… but they don’t yet know that.”
Underestimating the real cost of coverage
Cook sees this pattern time and again among privately held tech companies – particularly those backed by private equity. “The private equity firm will want to mandate certain coverages... but doesn’t necessarily protect operations of the actual subsidiary,” he said. That results in coverage designed to protect capital exposure, not the operational reality of the business.
AI in Insurance
Investors Pour $230 Million Into Industrial AI and Insurance
From automating warehouse docks and tracking cognitive performance to reshaping insurance underwriting, startups are leveraging new capital to hardwire artificial intelligence (AI) into operational workflows.
AI Reshapes Insurance and Market Infrastructure In the InsurTech sector, Nirvana Insurance closed a $100 million Series D round, nearly doubling its valuation to $1.5 billion just nine months after its prior raise. The financing was led by Valor Equity Partners, with existing investors Lightspeed Venture Partners and General Catalyst increasing their stakes.
Nirvana’s AI-native commercial insurance platform leverages real-time telematics and proprietary machine-learning models trained on more than 30 billion miles of fleet driving data to redefine underwriting, pricing and claims execution. The company says its systems can deliver quotes in minutes, reward safer driving with personalized pricing and resolve claims faster than traditional carriers by tightly integrating AI throughout the insurance life cycle. COMPLETE ARTICLE
Research
Triple-I reports early signs of stabilisation in US homeowners insurance market
According to the nsurance Information Institute (Triple-I), a US-based insurance industry research and education organisation, rising premiums and tighter coverage options continue to challenge household budgets across the country.
At the same time, Triple-I reports that the homeowners insurance market is beginning to show early signs of stabilisation, even as affordability concerns remain widespread.
Triple-I’s latest Issues Brief indicates that the US homeowners insurance segment is expected to achieve double-digit growth in net written premiums in 2025. Triple-I further projects that the segment could return to overall profitability in 2026, a shift that may gradually strengthen market conditions and support more consistent pricing for policyholders over time.
Triple-I explains that inflation, high rebuilding costs and ongoing climate-related losses remain the primary forces shaping premiums and coverage availability. The organisation notes that losses from the Los Angeles wildfires contributed to the weakest first-quarter homeowners underwriting results since 2011.
InsurTech/M&A/Finance💰/Collaboration
XBP Global Partners with a Leading Property and Casualty Insurance Organization to Transform Payment Processing Through AI-Driven Automation
XBP Global Holdings, Inc., a workflow automation leader that leverages decades of industry experience, a global footprint, and agentic AI to rethink business process automation and digital transformation, announced a strategic, multi-year partnership with a leading U.S. based property and casualty (P&C) insurance provider. The engagement, valued at approximately $24 million over five years, will modernize the insurer’s payment ecosystem through XBP’s intelligent, automation solutions.
As part of the partnership, XBP will deploy its advanced AI-driven and RPA-infused automation platform to digitize and streamline end-to-end payment operations specifically designed for the P&C insurance processing. A key component of this transformation is the implementation of XBP’s Mobile Payment solution, enabling secure, seamless, and compliant mobile transactions for policyholders while significantly enhancing speed and convenience.
Announcements
Demotech, Inc. supports efforts to improve the availability and affordability of Homeowners' insurance
Demotech, Inc. reports ending 2025 by supporting efforts to improve the availability and affordability of insurance, particularly Homeowners' insurance.
Our efforts consist of two primary channels. The first is reviewing and rating State Specialists, which comprise 23.6% of the insurers reporting data to the National Association of Insurance Commissioners. State Specialists understand their markets and often utilize the largest reinsurers in the world to provide catastrophe reinsurance protection to provide claims-paying capacity associated with natural disasters.
Second, we will continue to speak out, educate, and demonstrate the adverse impact of waste, fraud, and abuse on the cost of all insurance coverages. We pioneered the research project that revealed the online business model of tech-enabled litigation instigation. This business model has driven up the frequency of litigation in the insurance industry, and by doing so, has attracted and deployed tens of billions of dollars of third-party litigation funding to further increase litigation frequency against the insurance industry.
Joseph L. Petrelli, ACAS, ASA, MAAA, MBA, President and Co-founder, Demotech, Inc., states, "As 2025 concludes, our role in the unearthing of the business model of tech-enabled litigation instigation has pitted us against powerful plaintiff attorney firms and the third-party litigation funders who have profited by investing in litigation. Importantly, we support the position that the net profits associated with third-party litigation funding efforts should be universally taxed
Marsh announced restructuring aiming to save $400 million - Business Insurance
The brokerage sector is restructuring amid slowing economic growth and a softening commercial insurance rate environment as organic revenue growth moderates from recent highs.
Many brokers are streamlining their operations, prompted by technological advances such as AI and automation.
A story about a restructuring program announced by Marsh McLennan was the second-most-read risk management-related story this year on Business Insurance’s website.
Marsh McLennan said it expects the program to result in approximately $400 million in annualized savings over the next three years. Not annual
The world’s largest broker will incur $500 million in charges related to the program, mainly due to severance, work transitions and efforts to simplify the organization.
Part of the $400 million in savings will be reinvested in talent and technology, including expanding artificial intelligence deployment, the brokerage said.
2026 Outlook/Predictions
Top risk management stories of 2025
Lawsuits over broker moves, broker deals and a continuing strong insurance-linked securities market were among the most-read risk management-related stories on the Business Insurance website this year.