News
July CPI: Good News For The Fed, Mixed News For P&C Insurers
A CPI report is usually discussed from the perspective of consumers, central bankers, or bond investors. Macro specialists provide their views on the trend, the expected move, and the famous "odds" regarding interest rate changes. A CPI report can't be neglected when trying to understand the underlying trend of the U.S. economy.
Summary
- July headline CPI eased to 3.4%, but the insurance implications are less benign than the broader disinflation story suggests.
- Motor vehicle insurance prices fell 4.5% year over year while maintenance and repair costs increased 6.6%, creating a widening pricing-versus-claims-cost gap.
- Slower shelter inflation says little about homeowners claims, where construction wages, materials, catastrophe exposure, and reinsurance remain more relevant.
Progressive, Allstate, and Mercury enter this environment with strong underwriting margins, giving them more room to absorb adverse claims trends than weaker carriers.
The Great Insurance Sale Is Over, and 32 States Are About to Pay the Tab
Last year, car insurance premiums did something they almost never do: they went down. Rates fell an average of 6% nationally in 2025, and drivers in 39 states saw meaningful relief at renewal time. It felt like the market had finally corrected after the brutal inflation spiral that peaked in 2024.
It wasn't correction. It was a sale. And the sale is over.
New data from Insurify shows that 27 states have already seen insurance rates climb in the first half of 2026, and the company projects 32 states will finish the year with higher premiums than where they started it. By December, the average American will pay roughly $2,242 per year for full-coverage car insurance — a small-sounding increase on paper, but the reversal of a trend millions of drivers were counting on continuing.
The real story here isn't a 1% annual increase. It's what's happening underneath it — and why it's happening now.
August Issue of Best’s Review Ranks Top U.S. Insurers Across Multiple Lines of Business
[Ed.Note: Excellent source of information - must read for those tracking P&C carriers]
The August issue of Best’s Review includes the following exclusive rankings:
Largest Latin American Insurers – Ranked by 2025 Gross Premiums Written
US Pet Insurance Plans – Ranked by 2025 Direct Premiums Written
US Property/Casualty – Ranked by 2025 Direct Premiums Written by Line
US Total Auto – Ranked by 2025 Direct Premiums Written
US Commercial Multiperil – Ranked by 2025 Direct Premiums Written
US Homeowners Multiperil – Ranked by 2025 Direct Premiums Written
US Workers’ Compensation – Ranked by 2025 Direct Premiums Written
Total Cyber – Ranked by 2025 Direct Premiums Written
LexisNexis U.S. Insurance Demand Meter: Auto Insurance Shopping Volumes Maintain Historic Levels as Q2 2026 Shopping Growth Remains Elevated in 'Warm' Territory
U.S. consumer auto insurance shopping and new policy growth slowed from Q1 to Q2 but remained in warm territory on the LexisNexis® U.S. Insurance Demand Meter. Despite moderating growth, consumers continued shopping at near-record levels according to the latest report from LexisNexis® Risk Solutions.
Key Takeaways
- Shopping Growth Slowed but Remains "Warm": The quarterly year-over-year (YoY) shopping growth rate was 1.4%, down from 3.2% in Q1 2026.
- New Policy Growth Slightly Decreased: In Q2 2026, quarterly YoY growth for new policies registered at 3.3%, down from 3.6% in the last quarter.
- Exclusive Agent Channel Gains Momentum: The exclusive agent distribution channel outpaced both direct and independent agent channels for the first time since Q2 2022.
- Older Shoppers Continue to Lead Growth: For the 14th consecutive quarter, policyholders aged 66 and older recorded the strongest auto insurance shopping growth.
- MLS Listings May Help Signal Attrition: Policyholders 66 and older who shop their auto insurance policies and have an MLS home listing may serve as a signal indicating departure intent.
Climate/Resilience/Sustainability
Liberty Mutual Re and Safehub complete first sensor-triggered earthquake parametric payout
A 21-day claims settlement in Peru puts sensor-based parametric earthquake coverage to its first live test
A magnitude 5.8 earthquake struck Ica, Peru, on May 19, 2026. The commercial client holding a ShakeNet Parametric policy received a claims payment 21 days after the event and used the funds for immediate recovery costs. Liberty Mutual Reinsurance (LM Re) and Safehub confirmed the Peru event as the first earthquake parametric payment triggered by Safehub's Shake Network. The policy was placed by Price Forbes Latam and purchased by the client in October 2025 as a complement to its traditional indemnity placement.
That distinction matters. The parametric layer was structured to provide immediate liquidity after a qualifying seismic event, not to replace indemnity coverage. The 21-day settlement ran alongside, not instead of, the indemnity process. For brokers advising commercial clients in seismically active Latin American markets, the Peru event provides a verified settlement timeline and a working placement model to bring to that conversation.
Telematics, Driving & Insurance
Cameras and Telematics, a Drivers’ Best Defense
When faced with a post-accident court case that could trigger a so-called “nuclear” verdict (one where a civil jury awards more than $10 million in damages) truck drivers used to go into court or depositions armed with nothing but their own word.
That's changing fast. The median nuclear verdict jumped to $51 million in 2024, according to Marathon Strategies' Corporate Verdicts Go Thermonuclear report, up from $44 million in 2023 and more than double the $21 million median in 2020. Those numbers explain why fleets are installing more cameras and sensors into cabs than ever, and why drivers are starting to like it, so long as the program is launched with transparency.
Here’s how it works. Modern dash cams trigger on hard braking, a sudden lane departure, a collision, or a near miss, and they grab video from a few seconds before that trigger through a few seconds after. That clip syncs against the vehicle's own telematics data, speed, GPS position, brake application and steering angle, all stamped to the same second. Put those together and you get a record that speaks for itself. No “he-said-she-said.” The truck remembers what happened before you ask the driver to tell their story. MORE
AI in Insurance
Insurer Interest in AI Coverage Exclusions Growing as Risk Becomes Omnipresent
It’s no surprise given the penetration of artificial intelligence into lives and businesses that it appears insurers are gearing up to exclude AI risk in some of their commercial liability policies.
Three ISO exclusions have garnered more interest from carriers, according to an attorney who practices in the cyber space and an expert who helped write the exclusions.
“There’s been a major shift in the insurance industry’s treatment of AI-related risks and insurers are moving very quickly to limit this exposure,” said Alana McMullin, a partner in Lathrop GPM, whose practice focuses on defending clients in complex insurance disputes, products liability, and toxic tort litigation, as well as general liability matters.
Announcements
AM Best Is Looking for the Next Generation of Insurance Professionals
AM Best’s 2027 Student Challenge, which gives undergraduate and graduate-level students the opportunity to develop and showcase innovative solutions for risk management and insurance, is now open for submissions.
The 2027 Student Challenge calls for students to generate ideas in one of three areas: insuring data centers; parametric technology and triggers; and innovative risk transfer solutions.
Student submissions will be reviewed by professionals in AM Best Rating Services, then narrowed down to three finalists. Submissions will be judged based on degree of innovation, feasibility, impact, implementation and more.
“AM Best’s 2027 Student Challenge allows students to gain first-hand experience in insurance and risk management,” said Lee McDonald, AM Best senior vice president. “This is an opportunity to bring their ideas to life and present them to industry experts for feedback. Our Challenge provides exposure, resume expansion and a unique avenue towards collaboration with faculty and peers.”
Commentary/Opinion
Demotech, Inc. Reflects on Recent NAIC 2026 Summer Meeting in Columbus, OH
Joseph Petrelli, president and co-founder, Demotech, Inc. recently attended the National Association of Insurance Commissioners 2026 Summer meeting, held at the Greater Columbus Convention Center. Joe's thoughts follow.
"The opening address by Virginia's Insurance Commissioner and current NAIC President Scott A. White set the tone. After acknowledging the hospitality of Ohio's Director of Insurance, Judith French, Commissioner Scott mentioned Ohio's history of innovation, from Thomas Edison being born in Ohio to the Wright Brothers. His reference to innovation transitioned to the NAIC's power of innovation and its ability to drive change. He noted that the modernization of the NAIC's financial analysis process began in the 1990s and continues through today. In the life insurance area, the NAIC is prepared to monitor private-equity owned life insurers and scrutinize the complex investments that financial markets create.
"In the property-casualty insurance area, catastrophe risk management and climate change are being addressed. It was May 2019, when several commissioners met to view the site of the Paradise, California wildfires. I recall Commissioner Ricardo Lara's efforts to ensure that the protection due to Californians was delivered in a timely manner. Equally important, rather than wait for a catastrophic event to occur, the Pre-Disaster Mitigation and Risk Modeling (EX) Working Group has compiled a draft model law on mitigation programs, " Petrelli said."
Research
Nearly One-Third of Gen Z Drivers Reported Owning or Driving An Uninsured Vehicle in the Past Six Months
Nearly one-third of Gen Z drivers (30%) self-disclosed having owned or driven an uninsured vehicle over the past six months, making them the most likely generation to own or drive a vehicle without coverage, according to new research from TransUnion (NYSE: TRU). By comparison, 17% of Millennials owned or drove a vehicle uninsured, with rates declining further among Gen X (7%) and Baby Boomers (1%).
As the Gen Z driving population grows, insurers face the challenge of identifying drivers in this generation at risk of coverage lapse. This topic and others are explored in TransUnion's Q3 2026 Insurance Personal Lines Trends and Perspectives Quarterly Snapshot.
"We know affordability is a big challenge for Gen Z, and that certainly helps explain their lapses in coverage," said Patrick Foy, senior director of strategic planning for TransUnion's insurance business. "However, we don't think that's the whole story as more indicated that they simply chose not to renew their coverage than were unable to pay."
Cyber Risk
Shadow AI Risk Now Drives Insurance And Disclosure
IBM found shadow AI in 43% of security incidents. Shadow AI risk now sets insurance exclusions and EU disclosure duties boards cannot price.
Shadow AI, meaning the tools staff adopt without approval, turned up in 43 percent of security incidents last year, roughly double the share the year before, and 68 percent of the companies that were breached had no policy governing AI use at all. Those figures come from** IBM's Cost of a Data Breach Report 2026**, published on July 29 and drawn from 602 organizations breached between March 2025 and February 2026, with the shadow AI share sitting in the report itself rather than in IBM's announcement of it.
Four days later, Article 50 of the EU AI Act, its transparency provision, became binding and required companies to disclose when a person is dealing with a machine. That is the easy half of the law, satisfiable with a line of text on a chat window. Writing the line means knowing which systems need it, which is where the 68 percent starts to matter.
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