The State of the P&C Market

The property and casualty insurance market is rapidly entering a very different period than the one brokers, agents, and insureds have experienced in recent years.

Capacity in the property market has increased, significantly contributing to rapid deceleration of property rates even as competition intensifies across most segments. At the same time, regulatory, economic, geopolitical, and social pressures are increasing the complexity of the liability market.

Here is where the market stands now and what might be on the horizon.

Opportunities and Exposures

The most visible market shift is within property. Increased capacity and greater competition give brokers and agents an opportunity to revisit accounts placed during the hard market and determine whether broader or more favorable options are now available, including lower rates, increased or removed sublimits, and consideration of previously excluded occupancies or classes. Admitted carriers are also expanding their appetite across a range of areas, while global insurers are rapidly deploying additional capacity into the United States.

That does not mean every property account will benefit equally from these market conditions, have the opportunity to return to the admitted market, or receive significant rate relief. Geography, loss history, occupancy, construction, valuation, and individual risk characteristics remain significant underwriting considerations.

Liability tells a different story. Auto liability remains particularly difficult, with many insureds enduring double-digit rate increases. Other casualty lines face flat to upward rate pressure as litigation trends and increasing claim severity influence underwriting decisions.

Even as conditions evolve across the industry, the E&S market remains crucial in addressing specialty, complex, and difficult-to-place risks.

Market Trends and Growth Outlook

Looking through the remainder of 2026 and into 2027, these distinctions are likely to remain important for the market.

Property conditions have benefited from increased capacity, recent mild catastrophe activity, and favorable July 1 reinsurance renewals. Growing participation from the London and Lloyd’s markets is also contributing additional capacity. However, property remains highly sensitive to catastrophes and regional weather patterns, meaning conditions can change quickly.

E&S growth is moderating after years of rapid expansion. According to AM Best, the U.S. surplus lines market (encompassing domestic and eligible London, European, Bermudian, and other notable global insurance markets) grew 10.4% in 2025, to $143.3 billion in direct premiums written, its eighth consecutive year of double-digit growth. Growth among strictly domestic surplus lines insurers slowed to 8.9%, however, after hitting approximately 14% in both 2023 and 2024.

That slowdown should not be confused with a diminished role for E&S. AM Best has indicated that a broad migration of business back to the admitted market is unlikely. Certain risks still require solutions that may not fit comfortably within standard market appetites.

AI Adds New Coverage Questions

Artificial intelligence is emerging as a key exposure, influencing underwriting scrutiny, policy terms, and claims activity across a growing range of business lines. Carriers are taking different approaches to managing AI-related exposures, from affirmative coverage and endorsements to exclusions and sublimits. These considerations extend beyond cyber, errors and omissions, and other professional lines into more traditional coverages, including general liability, umbrella and excess liability, property, employment practices liability, and directors and officers (D&O). Depending on the line, carriers may scrutinize how artificial intelligence is used in an organization’s operations and clarify whether existing policy language applies to AI-related losses or introduce specific limitations or exclusions.

As organizations continue to integrate these technologies into their operations, policy language is expected to evolve alongside the exposure. The Jan. 1, 2027, reinsurance renewal may provide an important indication of that direction, including whether insurers and reinsurers move toward more explicit definitions of AI-related exposures and clearer affirmative coverage, exclusions, sublimits, or other coverage parameters.

Artificial intelligence also presents new challenges for risk selection and underwriting as claims experience develops. Emerging claims include allegations of AI-driven discrimination in hiring and promotion decisions, failures involving AI-supported professional services, compromised AI datasets, and D&O litigation tied to AI disclosures, governance, and overstated capabilities.

Looking Ahead

The market may be more competitive heading into 2027, but complexity has not disappeared. As geopolitical and economic conditions evolve, and where market conditions begin to stabilize, brokers and agents have an opportunity to revisit coverage decisions made during the hard market, explore options, and evaluate whether existing placements still meet their clients’ needs.

At the same time, emerging risks, including AI, cyber threats, and changing weather patterns, reinforce the importance of staying informed as underwriting priorities evolve. With broad market access, specialized expertise, global reach, and strong carrier relationships, Burns & Wilcox helps brokers and agents navigate these changes and identify tailored solutions for their clients.