Triple-I and Milliman Forecast US P&C Insurance Underlying Growth to Contract 3.7% in First Half 2026

The US property and casualty insurance industry enters 2026 from a position of apparent strength: full-year 2025 produced the lowest net combined ratio in more than a decade, policyholders' surplus climbed to $1.2 trillion, and the sector earned an estimated $63 billion net underwriting gain for 2025. Yet the forward-looking analysis from the Insurance Information Institute (Triple-I) and Milliman, their actuarial partner, paints a more cautious picture for the year ahead.

According to their joint P/C Economics and Underwriting Projections: A Forward View briefing, the US P&C industry's underlying growth is forecast to contract by 3.7% in the first half of 2026, following positive growth of 1.6% in 2025. This negative trajectory is partly a consequence of the industry's own success — premium growth has slowed to 3.6% net written premiums in 2025, the lowest since 2020, as pricing momentum fades and competition increases in profitable lines following several years of rate increases. Industry recovery to positive underlying growth is not expected until 2027 and 2028.

A key medium-term risk flagged by Triple-I and Milliman is replacement cost re-acceleration. While replacement cost inflation moderated significantly from its 2022 peak, the joint forecast projects replacement costs to grow at 2.1% in the first half of 2026 — unchanged from 2025 levels — before accelerating through 2028 and eventually exceeding broader US CPI inflation. This dynamic will put pressure on homeowners and commercial property underwriters who have benefited from the recent cost moderation cycle.

Michel Léonard, Triple-I's chief economist, noted that despite strong Q3 2025 GDP growth, 'a closer look at the data suggests the US economy may be increasingly vulnerable to rising economic, political, and geopolitical uncertainty.' Insurance employment fell 1.8% year-over-year in March 2026, underperforming the broader labour market. The Federal Reserve's holding pattern on interest rates — now through three consecutive meetings — creates its own uncertainty for insurers' investment income expectations, particularly if rates begin cutting before inflation is fully contained.