In the blink of an eye, we are in Q4 of 2025. At the beginning of the year, we detailed some of the trends and hot topics affecting commercial E&S insurance. Consistent story lines for the commercial P&C industry include a softening property market, litigation challenges for casualty business, and the adoption and implementation of AI. It is time to reflect on how the year progressed and what to expect as we embark on 2026.
The property insurance market continued to soften leading up to Q4 2025, and many would say that the pace at which property rates are decreasing has been somewhat surprising. According to Howden’s pricing index, risk adjusted rates for property cat dropped 8% at the January 1 renewals. In September of 2025, Guy Carpenter stated that rate decreases for 2025 have been in the “high single digits to low double digits” for the 2025 treaty renewals [1]. This is a result of both new capacity entering the market late in 2024 and increased competition from carriers achieving underwriting profits over the last two years. Despite record breaking wildfire losses in Q1 2025 along with continued convective storm activity, dedicated reinsurance capital continues to grow, and reinsurer profitability remains solid, according to Guy Carpenter.[2] If the current Atlantic hurricane season remains quiet, many anticipate that rates may continue to reduce heading into 2026. Conversations at the Rendez-Vous de Septembre in Monte Carlo, however, did not focus on falling rates. Reinsurers are still very pleased with terms, conditions and attachment points following the industrywide correction in 2023, and they anticipate this environment to hold up moving into 2026. Despite a softer market and more favorable rate environment for buyers, the E&S segment of the insurance market continues to grow. According to the WSIA 2025 mid-year report, surplus lines premiums rose 13.2% year over year. Commercial property insurance accounted for 34% of the total surplus lines premium, which marks a 5.7% year over year increase. Property values also continue to rise due to inflation and increased construction expenses, creating more exposure and in turn premium opportunity for the E&S market.
Regarding casualty business, economic and social inflation continue to result in increased indemnity severity and settlement costs. On top of that, carriers are seeing increases in defense and cost containment expenses. Nuclear jury verdicts continue to intensify, and payouts have doubled since 2020.[3] Reserve strengthening continues for pre-Covid years, and the trend is the same for post-Covid accident years as well. There is still a lot of uncertainty around Covid backlog years[4]. Liability carriers continue to tighten underwriting guidelines and push rates to account for these trends. Insurance advocacy groups and trade associations such as the APCIA continue to fight for implementation of legal reform. Georgia and Florida are examples of two states that have passed legislation at the state level to curb some frivolous lawsuits and the APCIA plans to target an additional 12 states in 2026 where they think there is an opportunity to advance legal system reform.[5] Concerns over PFAS litigation and sexual / physical abuse claims remain prevalent in the casualty space as well. As a result of these profitability challenges, many of the E&S binding carriers that we have spoken to say that they will need to achieve 5-15% rate increases in 2025. That said, as we move towards 2026, we are seeing a bit of a bifurcated approach to casualty from our binding carriers. While everyone agrees that severity of litigation is a major concern, especially in judicial hell hole venues and for challenged classes of business, carriers are competing fiercely for favorable, loss free casualty risks.
Technology
Technology remains a critical focus area for the overall industry, especially pertaining to eliminating inefficiencies. If the property market continues to soften as we move into 2026, E&S players will need to focus more on bottom line growth. AI is likely to dominate market discussions for the foreseeable future. AI technology continues to move from pilot to adoption and integration as brokers and carriers strive to become more efficient in their processes, especially for small business transactions. Carriers are scraping applications and gathering data to better understand opportunities and build niche products. Technology driven distribution models and algorithm driven underwriting programs will continue to become more prevalent as the E&S market evolves in today’s digital world.
In the face of ongoing market volatility, RT Binding teams are leveraging a wide range of markets coupled with innovative approaches, expertise, and consistent response to support retail clients with property and casualty placements. Whether the risks are straightforward or complex, our commitment is to quickly deliver effective solutions. Together, we’re well-positioned to navigate the evolving E&S landscape as we head into 2026.