Credit rating agency Fitch Ratings expects continued weakness in the U.S. property and casualty (P&C) insurance market through 2026.
Analysts believe that competition in the U.S. property insurance market will become more intense in 2026, and abundant capital and loose pricing will continue to drag down premium growth.
Revenue growth for insurers is likely to slow as interest rate momentum slows due to broader macroeconomic uncertainty. Even so, Fitch noted that stronger personal lines performance and solid commercial lines performance should help support stable financial performance and sustained underwriting profitability.
Fitch Ratings maintained its outlook for the global reinsurance industry at “Deterioration” in 2026, citing expectations that operating and commercial conditions will be moderately soft throughout the year.
Fitch Ratings reported that property and casualty insurers’ statutory performance benefited in 2025 from a relatively mild US hurricane season and increased reserve releases. Global natural catastrophe insured losses will reach $108 billion in 2025, well below the $147 billion in 2024 and below the five-year average of $125 billion. Data from Munich Re’s NatCatSERVICE cited by Fitch showed losses were broadly in line with the 10-year average of $107 billion.
Fitch Ratings highlighted that the most significant insured loss event in 2025 was the Los Angeles wildfires in California, which caused US$40 billion in insured losses and US$53 billion in total economic losses, making it the costliest wildfire event in U.S. history. In contrast, the 2025 Atlantic hurricane season was significantly weaker, with none of the five hurricanes making landfall in the United States for the first time since 2015.
Commercial lines insurers have been largely unaffected by losses from the California wildfires affecting major U.S. carriers. Fitch Ratings notes that regional and mutual insurers retain the majority of losses because individual events are not large enough to trigger many excess-loss reinsurance programs. This reflects reinsurers’ continued retreat from higher frequency catastrophe risks.
Fitch expects U.S. commercial insurers’ total combined ratio to be around 94% by 2025. Assuming catastrophe activity returns to more typical levels, underwriting profitability is expected to narrow slightly in 2026, with the combined ratio falling to 96%–97%.
On the personal lines side, Fitch Ratings expects homeowners insurance performance to continue to be supported by previous rate hikes and tightening of policy terms, which boosted the combined ratio. For private passenger cars, the pace of rate increases is expected to slow further but remain positive through 2026.
Fitch Ratings reports that reinsurance pricing has weakened sharply at renewal in January 2026, following a decline in mid-2025. Risk-adjusted prices fell across most real estate catastrophe lines. Interest rates for U.S. and European catastrophe risk portfolios have been cut by as much as 5%. For the loss-free U.S. real estate business, pricing fell as much as 20%, compared with a 10% decline to a 10% rise in the same period last year. Real estate pricing in European no-loss accounts also fell by 20%, compared with a decline of 15% in 2025 to a rise of 5%.
Fitch Ratings expects this trend to continue through mid-2026 renewals, including Asia-focused renewals in April and Florida-based renewals in June/July. Barring a major loss event, strong capacity levels and increased competition are likely to further drive progressive price erosion and more flexible terms, particularly in the real estate sector. Fitch added that competitive behavior remains restrained and loss rates continue to benefit from favorable claims frequency patterns.
While severe hurricanes and other natural disasters remain a major source of volatility for property and casualty insurers, Fitch Ratings believes the industry is well capitalized and able to withstand large single-event losses. However, a series of major catastrophic events over a short period of time could put pressure on capital positions and result in negative rating implications.
Overall, Fitch Ratings gives a “neutral” outlook to 2026 on the underlying industry outlook for the U.S. property and casualty insurance market, covering commercial and personal lines. In contrast, Fitch’s “deteriorated” outlook for global reinsurance reflects expectations that global reinsurers’ operating and business conditions will weaken in the year ahead.