60% of Global Insurers Expect Soft Landing in P&C Market Amid Easing Inflation
What does the positive outlook from insurers mean for underwriting strategy and pricing as we head into the next year?
Why Insurers Are Feeling More Confident
A recent industry sentiment survey found that roughly 60 percent of global insurers now anticipate a soft landing in the property & casualty (P&C) market in the coming year. The drivers behind this optimism make sense:
-
Inflationary pressures are easing. With cost increases stabilizing, the upward spiral in claims severity appears less intense.
-
Interest rates have begun to decline. As yield curves flatten and financing costs retreat, investment portfolios become less of a drag on insurer return profiles.
-
Market conditions appear to be settling. After years of tight underwriting discipline and hard market behaviour, the pace of change is slowing—giving insurers time to catch their breath and recalibrate.
In the U.S., for example, the research firm Swiss Re Institute projects direct premiums written growth in the P&C sector at around 5 percent in 2025 and 4 percent in 2026. They expect return on equity for the industry to hover at approximately 10 percent. (Swiss Re) Meanwhile, Moody’s recently reaffirmed a stable outlook for the U.S. commercial P&C segment citing strong underwriting profitability and growing investment income. (Insurance Business America)
“The underwriting tailwinds that drove 2024 improvements — strong premium growth, easing inflation and low claims severity growth — are largely in the rear-view mirror.”
— Swiss Re Institute analyst
In short: insurers believe conditions are better than they have been, and pressure is easing in many corners of the market.
How Underwriting & Pricing May Shift
What does this mean in practical terms for underwriting teams, rate analysts, and strategy groups? There are several implications worth considering.
Approach to underwriting
-
With inflation moderating, insurers may feel more comfortable loosening strict risk exclusions or reintroducing capacity in lines that had been heavily constrained.
-
The taste for risk may widen slightly, but this must be balanced with the still-elevated exposure to catastrophes and regulatory risks.
-
Underwriting discipline remains vital — many reports warn that the hard market is not yet over, and the cycle could reverse if losses or inflation pick up again.
Pricing strategy considerations
-
Rate increases may decelerate. After several years of rate hardening, especially in commercial property, the momentum appears to be shifting. For example, in mid-2025 reinsurance treaty rates for property are seeing single digit reductions or flat renewals. (NLC RISC)
-
For certain lines (such as personal auto) the competitive dynamic is intensifying—some rate filings are already signalling reductions. (Swiss Re)
-
Conversely, insurers may look to hold or increase rates in casualty lines where inflation (including social inflation) and reserve uncertainty remain strong. The broad market view is that while growth remains solid, underwriting margins will be harder won. (Swiss Re)
Risk monitoring & reserve planning
-
Even with an improving backdrop, catastrophe losses remain elevated. One analysis estimated that the first quarter of 2025’s wildfires in California could add roughly 3 percentage points to the U.S. industry’s combined ratio—this eats up nearly half the typical annual catastrophe allowance. (Swiss Re)
-
Reserve adequacy continues to be a concern — adverse development in casualty lines remains a tail risk.
-
Insurers should remain vigilant about counter-cyclical risk: if premiums stop rising and underwriting loosens, the sector may ramp up toward the next cycle downturn. The classic underwriting cycle remains alive. (Wikipedia)
What Should Insurers Be Doing Now?
Here are five key priorities for insurers positioning themselves for the anticipated “soft landing” while guarding against downside.
-
Review rate adequacy across lines, especially those where rate momentum is slowing.
-
Ensure underwriting guidelines reflect current inflation and catastrophe risk trends, not outdated cost assumptions.
-
Re-examine exposure to casualty risks and legacy reserve exposures—don’t assume the benign environment of recent years will continue uninterrupted.
-
Monitor competitive dynamics and capacity flows — be ready for pressure on terms, conditions and pricing in segments where new capital is entering.
-
Stay alert to external shocks (tariffs, supply-chain inflation, climate surprises) that could quickly flip the narrative from calm to turbulent.
In Summary
The majority of insurers are rightly optimistic about the upcoming year in the P&C market — easing inflation, lower interest rates and stabilising conditions point toward a more manageable environment. But this is not a green light for complacency. The market is shifting from rapid expansion to a plateau where margins and growth must be protected rather than relied upon to carry the business. For underwriting and pricing teams, that means focusing on resilience, discipline and staying ahead of emerging risks. A soft landing can be a good outcome — as long as it's intentional.