The property and casualty insurance industry has experienced one of the most dramatic financial turnarounds in recent history, and the implications could be particularly important for independent insurance agencies.
S&P Global Market Intelligence highlighted the changing marketplace in its 2026 Top P&C Insurance Company Performance Rankings webinar, which evaluates the largest U.S. property and casualty insurers and examines the financial factors separating top-performing carriers from the rest of the industry. S&P evaluates the 100 largest P&C writers based on net premiums written and separately examines carriers focused on personal and commercial lines.
Perhaps the biggest story behind the rankings is just how profitable the insurance industry became during 2025.
According to S&P Global Market Intelligence, U.S. P&C insurers generated approximately $67.9 billion in net underwriting profit during 2025. The industry’s combined ratio fell to just under 93%, representing its strongest underwriting performance in 19 years.
That is a remarkable turnaround from only a few years ago, when inflation, rapidly increasing repair costs, natural catastrophes and inadequate rates created substantial losses for many insurance carriers.
Personal Lines Makes a Dramatic Recovery
Personal auto and homeowners insurance played a major role in the industry’s recovery.
Carriers spent several years aggressively increasing rates, tightening underwriting requirements, reducing exposure in difficult areas and, in some cases, temporarily restricting new business. Those actions eventually began producing results.
S&P reported that private auto and homeowners results improved substantially during 2025 as previously approved rate increases worked their way through carrier books of business. Large personal-lines insurers including Progressive, Berkshire Hathaway/GEICO, Allstate, USAA, Liberty
Mutual, Farmers and American Family were among the groups generating the industry’s largest underwriting gains.
For insurance agencies, this improvement is extremely important.
When insurance companies are losing money, they typically respond by tightening underwriting, reducing commissions, limiting new appointments and declining risks they previously would have accepted.
When profitability improves, the opposite can eventually occur and carriers begin looking for growth again.
Competition Is Returning
S&P’s 2026 outlook indicates that competition is increasing, particularly in personal auto. Premium growth is slowing and insurers that spent the hard market restoring profitability are increasingly in a position to compete for additional business.
There are already indications that the massive rate increases experienced during the hard market are moderating.
For homeowners insurance, S&P Global Market Intelligence data showed the national effective approved rate change declining from approximately 13.6% in 2024 to 6.3% in 2025 and approximately 1.8% through July 2026. The results vary considerably by state and catastrophe exposure, but the national trend illustrates how dramatically conditions have changed.
This does not necessarily mean insurance rates will suddenly decline everywhere. Construction costs, catastrophe exposure, reinsurance expenses and litigation continue to create significant pressure.
But it does indicate that the marketplace is moving away from the extreme conditions agencies experienced during the height of the hard market.
Commercial Casualty Remains a Concern
Not every part of the insurance industry is improving at the same pace.
Commercial casualty remains challenging. S&P found that several liability lines deteriorated even as the overall P&C industry produced extraordinary profits.
The industry’s aggregated casualty loss ratio increased during 2025, while other liability coverage reached its highest loss ratio in more than two decades. Social inflation, larger jury awards, litigation costs and adverse reserve development remain significant concerns.
That creates an unusual marketplace in which property and personal lines may become increasingly competitive while portions of commercial casualty remain difficult.
What This Means for Insurance Agencies
For agencies, the most important development may be the return of carrier appetite.
The hard market forced agencies to rely heavily on surplus lines, specialty markets and limited carrier options simply to obtain coverage for many clients. As admitted carriers restore profitability and begin competing for growth, agencies should continually review accounts that were moved into higher-priced or more restrictive markets during the hard market.
The next phase of the insurance cycle appears likely to bring more competition, more capacity and additional opportunities for agencies to move accounts back into preferred markets when appropriate.
After several years in which obtaining coverage was often the biggest challenge, agencies may increasingly find themselves operating in a marketplace where carriers are once again competing for their business.
