P&C Report: 2026 Forecast

INTRODUCTION

2026 will be a pivotal year for the Excess and Surplus (E&S) marketplace within Property and Casualty (P&C) following the unique market dynamics of 2025. In short, market cycles are shifting with a softening hard market combined with E&S expansion. This creates both challenges and opportunities for brokers and agents.  

The market is characterized by moderate growth, plentiful capacity, and strong underwriting discipline. That discipline is necessary given the continued impact of social inflation, nuclear verdicts, and private equity-funded litigation support for the plaintiff’s bar. The good news is that the industry has adjusted to these challenges with proactive strategies designed to limit their impact. 

The E&S market has recorded 14 straight years of premium growth, often with double-digit increases. It has doubled its share of total P&C premiums compared to a decade ago, according to a September 2025 article on Beinsure Media. Casualty lines now account for more than half of the direct premiums written in the Excess space.  

Sector health is further represented by carrier profitability. The relatively tame Atlantic Hurricane season (covered in more detail below) helped, motivating more carriers to enter vertical and geographic markets. 

Carriers increasingly releasing reserves 

Numerous carriers have reduced the amount of money they set aside for claims as overall claim frequency has declined. As a result, many carriers outperformed initial financial projections for 2025, posting generally positive balance sheets. The use of reserve releases has also emerged as a trend that partially offsets the effects of social inflation and runaway jury awards, which typically drive rates higher. This is a development that many industry leaders, from regulators to rating agencies, will be closely watching. 

Regulatory and litigation trends  

State legislative activity is shifting how carriers view states. For example, Georgia attracted significant litigation in recent years, rivaling New York, Illinois, and other states where some carriers have reduced their business. Civil litigation filings in Atlanta-area courts rose sharply in 2024 and continued to increase in 2025, with tens of thousands more cases than in prior years, according to Insurance Journal. 

However, the Georgia legislature passed some tort reform bills in 2025 that may lessen the number of filings in 2026 and beyond. 

Tort reform is having a positive impact in other states as well, including Florida. Nuclear verdicts are falling, and the tort reforms passed in 2022-23 eliminated one-way attorney fees, which barred Assignment of Benefits (AOBs) in new policies, tightened rules for bringing bad-faith claims, and created broader tort-reform measures, according to Insurance Journal. 

The Insurance Insider highlighted Florida Insurance Commissioner Mike Yaworsky in December, who indicated that both established, national carriers and newly formed ones are actively pursuing new business in the Sunshine State. These reforms are causing carriers to show more interest in doing business in Florida.  

RATES

We are witnessing a period of “measured hardening” in the P&C sector. Pricing discipline is expected to hold in many core lines with less aggressive rate increases, according to Reinsurance News.  

Rating agencies such as Fitch also indicate that underlying fundamentals and profitability remain solid. As a result, single-digit increases are likely across many sectors. However, with January 1 reinsurance renewals making headlines, we expect moderate rate reductions across the board. 

CAPACITY

Little has changed over the past year in terms of capacity availability among most P&C verticals. Part of that availability is tied to the broad access that brokers and agents have to global carrier capacity. Most industry experts suggest that the amount of capital willing to write non-admitted/specialty P&C risk globally is higher than at any time in the last decade. Meanwhile, reinsurers are increasingly comfortable backing E&S platforms. We expect available capacity to continue. 

TERMS & CONDITIONS (T&C)

Carriers have carefully reviewed the language within their policies in recent years. This language should remain consistent across Property and Liability, particularly given the impact of social inflation, runaway jury awards, and litigation funding. These challenges will require continued underwriting discipline, with little easing expected. Carriers recognize that maintaining this discipline over the long term is essential to preserving the progress made in recent years. 

Contributor: Paul G. Smith, Group Senior Vice President, H.W. Kaufman Group, New York, NY 

Personal Insurance:

As we enter 2026, the Canadian Residential Property Insurance market is expected to carry forward many of the trends seen at the end of 2025, with early signs of stabilization and selective tightening emerging—particularly for CAT-exposed risks. Capacity remains available across both standard and specialty segments, though insurers are increasingly focused on profitability, data quality, and long-term sustainability. 

CAT activity, especially wildfires, continues to shape underwriting strategy. While overall losses in 2025 trended lower than initially projected, recent and ongoing wildfire events—including those in Atlantic Canada—underscore the persistent volatility of the Canadian CAT landscape. Loss development is still being evaluated and may influence localized pricing and terms as carriers reassess aggregate exposure. 

The market has benefited from improved risk mitigation and underwriting discipline. Many CAT events occurred in less densely populated or lower-value areas, and where losses did arise, higher deductibles, coverage restrictions, and strengthened mitigation requirements—such as defensible space initiatives and fire-resistant construction—helped protect insurer results. These measures are expected to remain a cornerstone of underwriting in 2026. 

Competition remains active in low- and moderate-risk regions, where pricing is largely flat and capacity continues to expand. However, in higher-risk or historically loss-affected zones, the pace of softening is slowing. Insurers are applying greater scrutiny to location, construction, prior losses, and mitigation efforts. As a result, the market is increasingly bifurcated—stable conditions for preferred risks, alongside modest rate firming or tightened terms for more complex exposures. 

Standard insurers continue to underwrite selectively. While non-renewal activity has eased, challenges persist for properties with prior losses, high insured values, custom construction, multiple lenders, or non-traditional occupancies such as short-term rentals or home-based businesses. Inflation and rising reconstruction costs remain key pressure points impacting affordability and capacity. 

Brokers and clients continue to rely on specialty markets for flexible solutions as standard market guidelines tighten in higher-risk segments. 

Looking ahead to 2026, we expect: 

• Generally flat pricing and stable capacity in low- and moderate-risk areas 
• Selective rate firming for hard-to-place risks 
• Increased emphasis on data, mitigation, and risk selection 
• Continued reliance on specialty markets for complex Personal risks 

In response, Burns & Wilcox continues to expand its Personal Insurance offerings, including the recent launch of a second specialty Homeowners’ product. With multiple specialty solutions now available, Burns & Wilcox is well positioned to support brokers navigating a more disciplined Personal lines market in 2026. 

Contributor: Michelle Allemang, Manager, British Columbia, National Product Leader, Personal Insurance, Burns & Wilcox, Vancouver, BC

Commercial Insurance:

As we move into 2026, the Commercial Insurance market is expected to remain competitive, with continued soft—though hopefully stable—conditions. After a full cycle of the soft market in Canada, we anticipate improved renewal retention and rate levels that remain largely flat. 

Our focus remains on delivering flexible solutions for complex and hard-to-place Property and Liability risks, supported by expanded capacity and targeted product offerings. Key highlights include: 

• Property capacity of up to $15 million 
• Commercial realty risks (including vacant and mixed occupancies) 
• Student and rooming houses
• Hospitality operations 
• A broad range of contractor classes 

Burns & Wilcox will continue to differentiate through responsive service, disciplined underwriting, ongoing product development, and strong partnerships with our retail brokers and markets. 

Contributor: Patricia Sheridan, Managing Director, Burns & Wilcox, Toronto, ON  

Construction

The Construction Insurance market has remained soft in recent years, driven by increased competition from new MGAs and highly competitive pricing. As we enter the new year, rates are beginning to stabilize, supporting a more balanced and sustainable market. 

Concerns around tariffs, inflation, and supply chain disruptions continue to affect material costs and project timelines, and these factors remain key considerations in evolving Construction Risks and insurance needs. 

Burns & Wilcox remains a trusted partner for Construction risks of all sizes, supported by a strong product portfolio and a commitment to service excellence. Ongoing enhancements to the Builder’s Risk program continue to deliver added value and flexibility for brokers and their clients. 

Contributor: Steven Hrab, Director, Construction, Burns & Wilcox, Toronto, ON

Professional Liability:

The Professional Liability space remains to be highly competitive both with our domestic and London partnerships due to the soft market. Burns & Wilcox has made a concerted effort to expand our offerings to provide our clients with the best-in-class coverages to support their specific insurance needs. 

Demand for customized solutions in Architects & Engineers (A&E), Miscellaneous Errors & Omissions (E&O) and Cyber will remain our focus this year. To meet these needs, we have strengthened partnerships with both established and new markets, allowing us to deliver more innovative and competitive solutions tailored to the unique risks professionals face. Our partnerships have provided us with the expansion of our in-house underwriting capabilities to service our clients faster and more efficiently. 

Additionally, our expanding appetite in the health and wellness space has allowed us to gain momentum with this line of coverage.  

Our commitment to delivering exceptional coverage remains unchanged, supported by both existing relationships and newly formed market alliances that allow us to maintain competitive pricing in today’s environment. 

Contributor: Danion Beckford, Senior Underwriter, Professional Liability, Burns & Wilcox, Toronto, ON 

Transportation Insurance:

The Transportation sector heads into 2026 with a cautious outlook. Freight volumes have steadied but not surged, and most carriers are still prioritizing margin protection over aggressive growth. Equipment costs, labor shortages, and financing pressure have not disappeared, so operators continue to run lean fleets and focus on profitable lanes rather than pure expansion. 

From an insurance standpoint, the prolonged softening of the market has kept pricing highly competitive. Capacity remains plentiful, and many insurers are willing to stretch on terms to hold onto market share. That dynamic is great for buyers in the short term, but it also creates pressure on underwriting discipline, especially as loss frequency tied to nuclear-verdict territory and social inflation has not meaningfully improved. Risk selection and clean data remain differentiators for carriers looking to secure the best deals. 

Cross-border operators are now managing another variable: tariffs. Added friction at the border, extra documentation, potential cost pass-through, and uncertainty in trade flows have made long-haul routes harder to price and predict. Insurance providers will be watching whether volatility drives changes in fleet mix, routing decisions, and cargo values. As 2026 unfolds, stability will depend less on headline rates and more on how well companies adapt to changing cost inputs and a competitive underwriting landscape. 

Selecting the right partner is more crucial than ever to help you navigate through the turbulence. Our Transportation solutions at Burns & Wilcox Canada can help you close those gaps. 

Contributor: Fernando Batista, Manager, Transportation, Burns & Wilcox, Canada Division, Toronto, ON 

Environmental Insurance:

The Canadian Environmental Impairment Liability (EIL) market is expected to remain soft entering 2026, with competitive conditions persisting across most segments. Continued participation from newer MGAs in the environmental space is sustaining downward pressure on pricing. At the same time, ongoing industry consolidation—driven by mergers, acquisitions, and pockets of financial strain—continues to influence contractor risks and, to a lesser extent, select premises exposures such as manufacturing and industrial operations. 

Renewal activity is likely to remain price-sensitive; however, established broker–underwriter relationships should continue to support strong retention outcomes. While premium levels remain compressed, there is measured optimism for new business opportunities, particularly for well-managed risks supported by clear, well-documented underwriting narratives. 

No significant shifts in overall market behavior are anticipated in the near term. Underwriting discipline remains intact, though there is a gradual expansion of available capacity and increased willingness to consider broader risk profiles. This cautious growth reflects a collaborative approach to placing business amid ongoing competitive and economic pressures. 

The traditional late-year surge in 2025 began earlier than usual and is expected to extend into the early part of 2026. Rate compression is expected to persist, but responsive pricing strategies and disciplined underwriting should continue to support market stability and consistent placement outcomes. 

Contributor: Karim Jaroudi, Manager, Environmental, Burns & Wilcox, Toronto, ON

LONDON MARKET UPDATE

Property  

The 2025 Property market was a year of transition. Key developments include softening rates and strategic shifts within the London market. With the 1/1 reinsurance negotiations for 2026 underway, U.S. Property Cat buyers are expected to benefit from further increased rate flexibility, with rate reductions projected at 15-20% for the forthcoming year. Stamp capacity growth has slowed for many major syndicates, signaling more caution as we enter the new year. Meanwhile, investment in technology continues to be a significant focus, and within the London market a rise of cross-class facilitation remains a central theme. Lloyd’s CEO Patrick Tiernan reported 50% growth in cross-class facilities, highlighting a trend toward streamlined placement and efficiency.  

Last year began with significant wildfire losses in California, estimated at $40–50bn, followed by an extremely benign U.S. storm season with no major hurricanes making landfall. This favorable catastrophe environment has accelerated rate reductions throughout the second half of the year and is expected to continue into 2026. Coastal states are experiencing the greatest pressure on rating, driven by both local and London markets competing aggressively for business. 

Looking ahead, while market conditions suggest continued softening, success will depend on disciplined underwriting and strong strategic partnerships. Technology-driven efficiencies and innovative facility structures will play an increasingly important role in sustaining growth and profitability. Maintaining underwriting rigor and adapting to evolving market dynamics will be critical as we navigate the challenges and opportunities of 2026. 

Contributor: Kerry Hall, Head of  Burns & Wilcox  Lloyd’s  Products, Burns & Wilcox Global Solutions, London, UK   

Casualty    

Q4 2025 signaled a shift toward a softer phase. Lloyd’s warned that Casualty price adequacy is “probably insufficient,” even as Property rates fell and Cyber growth ambitions accelerated; management emphasized maintaining long‑term return hurdles amid narrowing margins and a more competitive distribution landscape (facilities, structured solutions). Independent commentary echoed this, noting that rate alone cannot be relied upon—discipline around terms, attachment points, and portfolio selection is central as follow‑market models face pressure from facilitation and broker structures. At a macro level, AM Best revised its London Market outlook to stable, citing signs of softening and persistent social inflation risk, albeit supported by higher investment yields and ongoing demand from U.S. E&S lines.   

Casualty pricing/placement in London

By late‑2025, Primary Casualty was broadly competitive, with General Liability (GL) increases moderating and Workers’ Compensation typically flat, while Auto Liability remained elevated due to claims severity and repair complexity (including EV battery issues). Excess/umbrella towers showed continued diligence—lower layers and loss‑affected accounts seeing high single to low double‑digit moves, but with stabilization compared to the 2023–2024 peaks; carriers remained wary of auto exposure and attachment points. Overall, capacity was available, yet it often required more markets to complete limits, and incumbents increasingly traded margin to retain positions on clean accounts.  

Bermuda Casualty

Bermuda entered Q4 with firmer pricing, but signs of moderation: low‑hazard risks achieved flat to +6%, while high‑hazard or loss‑affected exposures remained +5% to +20%, supported by disciplined underwriting and selective capacity growth. Indications point to appeals tempering nuclear verdicts and to an expected “Class of 2026” of new carriers, which could broaden appetite at various attachment levels and occupancies.  

Spring 2025 updates had already highlighted litigation inflation and constrained capacity as persistent drivers for casualty—conditions that have eased only on cleaner accounts. 

Capital & renewal dynamics into 2026
Balance sheets remained strong: Bermuda (re)insurers posted robust returns despite a higher combined ratio (~90% for 2024) and rising catastrophe loss contributions; market pricing passed its peak, but underwriting discipline and alternative capital (ILS) underpin resilience. January 2026 renewals suggest an orderly market with moderating Property‑CAT rates and largely intact terms; third‑party capital rose and sidecars extended beyond property—supporting flexible capacity deployment across specialty and, selectively, Casualty. For London, Lloyd’s projects 2026 growth with a 91.2% target net combined ratio but reiterates that sustainable profitability hinges on careful monitoring of price adequacy and the evolving battle for distribution facilities and structured solutions. 

Trends heading into 2026
Expect continued rate moderation and broader capacity for clean Casualty risks, counterbalanced by pressure on auto‑related segments and higher‑hazard classes (Construction, Habitational) where severity persists. As mentioned in last quarter update, structured solutions and multi‑year deals will expand for preferred risks (especially in Bermuda), while London will see facility‑led placements grow, challenging pure follow models and rewarding underwriters and brokers who articulate differentiated value. Social inflation and litigation funding remain watch‑items; however, appeals dampening nuclear verdicts, and new entrants suggest a more stable—but still disciplined—Casualty landscape. 

Contributor: Declan Durkan, Managing Director, Non-Marine, Burns & Wilcox Global Solutions, London, UK 

CONCLUSION

The E&S marketplace remains resilient following the unusual conditions of 2025, extending its streak of premium growth to 14 consecutive years. Casualty lines now account for the majority of E&S premiums. Despite pressure from social inflation, nuclear verdicts, and litigation funding, carriers have preserved profitability through disciplined underwriting, reserve management, and favorable tort reforms in states such as Florida and Georgia. 

Technology and innovation are increasingly central to underwriting and risk management strategies. Advances in catastrophe modeling, alternative inspection methods, Parametric solutions, and clearer policy language for emerging risks—such as artificial intelligence—are helping carriers manage volatility. At the same time, ample capacity and moderate rate softening across commercial and personal lines are improving market access and coverage quality. 

Looking ahead to 2026, the outlook is cautiously optimistic, with expectations for continued expansion, competitive but sustainable pricing, and a more predictable operating environment. While challenges persist, the E&S sector’s adaptability, regulatory improvements, and technological integration position brokers, agents, and carriers for steady growth and effective responses to evolving client needs. 

Contributor: Paul G. Smith, Group Senior Vice President, H.W. Kaufman Group, New York, NY

Disclaimer: The above information has been prepared solely for the purpose of sharing general information regarding insurance and business practice management issues. These are just our opinions and are not intended to constitute legal advice or a determination on issues of coverage.