Insurance Agencies & Brokerages NAICS 524210

Feb 19, 2026 - P&C Insurance Stays Profitable Last Year Amid Major Natural Disasters

• In 2025, the US property and casualty insurance industry stayed largely profitable, continuing the momentum from 2024’s strongest underwriting results in over a decade. Homeowners insurance hovered near breakeven, with combined ratios around 99-100%, as disciplined pricing and careful underwriting helped offset losses from major catastrophes, especially California wildfires early in the year. Personal auto lines fared better, posting solid underwriting gains, while overall industry margins were supported by relatively calm catastrophe activity in the latter part of the year. Still, insurers like State Farm faced significant losses from wildfire claims, prompting rate hikes in hard-hit areas. These moves sparked customer frustration and drew regulatory attention, highlighting the ongoing tension between covering growing risks and keeping insurance affordable.
• Medicare’s proposal to raise 2027 Medicare Advantage payments by just 0.09% - far below the roughly 5% Wall Street expected - sent shockwaves through the insurance market. Major insurers lost nearly $90 billion in market value in a single day, underscoring how central Medicare Advantage has become to industry profits and growth. For companies, the proposal threatens earnings, forces tougher cost discipline, and intensifies lobbying efforts ahead of final rates. For customers, the likely impact is more mixed: insurers may scale back extra benefits, narrow provider networks, or add cost controls to protect margins, potentially reducing plan generosity and choice. Regulators argue the move improves payment accuracy and long-term sustainability, but the episode highlights rising political and regulatory pressure on insurers - and growing uncertainty for seniors who rely on Medicare Advantage plans.

• US home and auto insurers are facing mounting political pressure as profits surge largely because of steep premium increases that have strained household budgets. After suffering post-pandemic losses, insurers pushed through aggressive rate hikes - especially in homeowners insurance - driving the property-and-casualty industry to its strongest underwriting profits in nearly two decades. Home-insurance rates rose an average 6% last year, according to S&P Global (more than double inflation) with much larger increases in high-risk states such as Colorado and California, while auto rates have only recently stabilized in some markets. The disconnect between higher premiums and near-record earnings has fueled calls for profit caps, including a proposal from New York Governor Kathy Hochul. Insurers argue such caps would reduce competition and force market exits, saying profits reflect delayed recovery and regulatory lag, but critics say affordability concerns are being sidelined as earnings remain elevated.
• Auto collision trends in 2025 are reshaping loss costs and claims operations for auto insurers, according to CCC Intelligent Solutions. Elevated vehicle prices and interest rates are keeping drivers in older cars longer, expanding and diversifying the insured vehicle mix and increasing exposure to higher repair complexity. Claims severity continues to rise as advanced driver-assistance systems, electronics, and mixed powertrains drive greater use of diagnostics, scans, and calibrations. Calibration frequency has surged from less than 1% of appraisals in 2017 to 23% in 2025, while nearly 70% of claims now include scans, adding cost and operational variability. Parts price volatility tied to tariffs and supply chain instability has further pressured claim payouts, even as overall claim frequency remains relatively stable. For insurers, these dynamics are extending cycle times, complicating estimating accuracy, and challenging traditional severity assumptions, reinforcing the need for updated pricing, underwriting, and claims management strategies.