P&C Insurance Market Outlook, Insights and Emerging Trends with Dr. Robert Hartwig

Key takeaways

• The P&C industry is in strong financial shape, with industry capacity hitting a record $1.3 trillion as of mid-2026 and underwriting performance better than it’s been in over a decade, said Dr. Robert Hartwig of the University of South Carolina’s Darla Moore School of Business.  
• Last year’s lack of landfalling hurricanes helped drive a roughly four-point improvement in combined ratios across most lines, Hartwig said.
• Top-line P&C growth is expected to reach 2% in 2026 and 3% in 2027, according to Hartwig. 
• The build-out of AI data centers is projected to have an insurable value of $7 trillion worldwide, with global premiums expected to more than double to $24 billion by 2030, according to Aon data cited by Hartwig. 
• Rising inflation linked to geopolitical issues will continue to affect the industry, he noted, but the 4.1% unemployment rate and recession odds that have fallen to 25% offer cause for optimism.

Economist and industry veteran Dr. Robert Hartwig of the University of South Carolina’s Darla Moore School of Business joined Wednesdays with Woodward^® for a data-driven look at the forces reshaping the property and casualty landscape. He examined the current state of the P&C industry and what the latest economic signals – from interest rates and inflation to growth trends and the AI infrastructure boom – may mean for the P&C insurance business and our customers.

Summary

What did we learn? Here are the top takeaways from P&C Insurance Market Outlook, Insights and Emerging Trends with Dr. Robert Hartwig:

The P&C insurance market remains strong amid rising economic uncertainty. 

Last year saw the best underwriting performance in over a decade, Hartwig said, noting that the lack of landfalling hurricanes in 2025 and so far in 2026 has helped shape this positive picture. The combined ratio for most lines (workers compensation is an exception) improved by about four points overall last year, and top-line P&C growth is expected to hit 2% this year and 3% next year, he stated. Amid economic issues such as rising interest rates and the U.S. reaching $40 trillion in national debt, insurers have added to the capacity that backs every claim paid, he said, noting that policyholders’ surplus capacity reached $1.3 trillion as of mid-2026. “That is a record,” he said. “That means the industry is financially strong.” Watch at 4:19

Litigation trends are contributing to insurance affordability challenges. 

The U.S. tort system cost an estimated $529 billion in 2022, which works out to more than $4,200 per household, according to the U.S. Chamber Institute for Legal Reform. While that “tort tax” doesn’t show up on any receipt, businesses and families pay it every day as costs work their way into the price of goods, services and insurance policies. Commercial auto has been particularly hard hit. Contributing factors include large jury verdicts, growing distrust of corporations and a surge in attorney advertising, Dr. Hartwig explained. Third-party litigation funding (TPLF), in which outside investors finance lawsuits in exchange for a share of any settlement, is also driving up costs. States are beginning to respond: This year, North Carolina became the first to ban TPLF outright, and others are enacting reporting and disclosure requirements. Watch at 33:38

AI data centers present both opportunities and risks for the P&C insurance industry. 

Total insurable value of AI data center infrastructure is expected to hit $7 trillion worldwide, with associated global insurance premiums doubling to over $24 billion by 2030, Hartwig noted, citing Aon data. But these multibillion-dollar facilities require complex insurance and reinsurance programs involving multiple carriers, which poses a challenge for brokers, he noted. Watch at 29:18

Rising inflation linked to geopolitical issues will continue to affect the industry. 

Inflation reached the highest rate in 40 years in the wake of the pandemic, and it’s on the rise again due to factors such as tariffs and higher energy costs, Hartwig said. This is increasing claim costs primarily in the auto and property areas, he noted. Prices are rising in step with tariffs on auto parts and materials used to repair and build structures, such as aluminum, steel and lumber, he noted. The average U.S. statutory tariff rate is about 11.3% and expected to near 12% by the end of the year, according to the Yale Budget Lab, he said, adding that new tariffs being imposed on Canada haven’t made their way into the data yet. Some good news, though: The unemployment rate remains stable at about 4.1% and the likelihood of a recession in the next 12 months has dropped to 25%. “That’s very good news,” he said. Watch at 21:30

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