Commercial insurers are entering the second half of 2026 from a position of financial strength, even as inflation, geopolitical instability and shifting economic conditions continue to create uncertainty across global markets, according to Lockton’s latest commercial insurance outlook.
Industry performance remained exceptionally strong during the opening quarter of the year. Citing S&P Global Market Intelligence, the report said property and casualty insurers produced $22.1 billion in underwriting gains, marking the sector’s strongest first-quarter underwriting result in 25 years. Investment returns also remained supportive, helping reinforce insurers’ overall financial position.
Data referenced from AM Best showed the industry’s momentum continued through 2025. Investment income increased 13% for the second consecutive year of double-digit growth, while the median return on capital employed reached 12.41%, exceeding the cost of capital for a third straight year. Return on equity climbed to 14.97%, its highest level in more than a decade.
Improved profitability has encouraged greater competition among insurers, creating broader market access and steadier pricing for many commercial insurance buyers. The report notes that capital remains readily available, although insurers are deploying it more selectively, with increased attention to underwriting quality, portfolio structure and long-term returns.
The outlook also cautions that favorable conditions may not last indefinitely. Social inflation, geopolitical conflicts and potential volatility in bond markets continue to pose meaningful risks. While catastrophe losses eased during 2025 following a relatively quiet Atlantic hurricane season, the report notes that insurers still absorbed more than $100 billion in natural catastrophe losses, illustrating the industry’s ongoing exposure to large-scale events.
For insurance buyers, the report recommends taking advantage of today’s competitive market by strengthening coverage programs, evaluating long-term arrangements and regularly reviewing risk financing strategies before market conditions change.
Source: Lockton Companies.
