Executive summary:
Structural pressures within the P&C market are expected to erode margins over the next several years, specifically in personal and commercial auto. And, insurance fraud costs the U.S. an estimated $300 billion annually, with catastrophic weather events creating ideal conditions for fraudsters to exploit overwhelmed claims teams. Leading carriers are deploying tools at the earliest stages of claims triage to fast-track low-risk claims and route high-risk ones for investigation, while most carriers still lack the technology maturity to do this consistently. Clearspeed provides a voice-based risk assessment layer deployable at FNOL across any line of business, and has already demonstrated enterprise-scale results.
Introduction
The property and casualty (P&C) insurance market is coming off one of its strongest underwriting environments in nearly two decades. Strong pricing, market conditions, and improved performance have resulted in combined ratios rebounding towards profitability.
However, the same reports that are celebrating profitability are also flagging emerging pressures that could reshape the claims landscape over the next several years. They are highlighting rising loss severity, escalating litigation costs, increased fraud, and growing catastrophe losses as forces that will define the next cycle.
The next market cycle is already forming. Carriers that invest sooner in better risk detection and fraud prevention will be those who are best positioned to maintain margins as conditions tighten up. The following piece draws on recent industry reports and research to surface what’s coming in the future and how carriers should be responding – particularly with early risk assessment solutions to prepare for what’s next.
The inflection point
Recent performance across the P&C sector has been encouraging. Data from S&P GMI (Global Market Intelligence) projects the strongest overall P&C combined ratio in 18 years for 2025 (~96.2). For many carriers, this demonstrates a welcome return to profitability following years of inflation-driven losses and catastrophe volatility.
While the headline numbers may look good, the trend lines don’t. Forward-looking indicators tell a different story where several key lines of business, such as auto, continue to suffer from structural pressures. Personal auto combined ratios are forecast to climb back to 97.1 in 2026 and worsen through 2028. As for commercial auto, it remains one of the industry’s most persistent problem areas. According to AM Best, it has now posted underwriting losses for 14 consecutive years; 2024 losses hit $4.9B which is nearly double the 11-year average of $2.9B.
Overall P&C premium growth is expected to decelerate from ~5.5% in 2025 to ~3% in 2026 as the market softens and competitive pressures increase. The takeaway is clear: carriers in a profitable moment have a narrowing window to invest in the right kind of infrastructure that protects margins when conditions continue to tighten.
Social inflation is reshaping claims costs
Based on research from the Swiss Re Institute, annual liability costs driven by this social inflation (litigation costs, changing jury attitudes, expanding liability awards, as some examples) grew by approximately 7% in 2024 – the highest increase in two decades. Further:
- Only 56% of Americans now believe there are too many lawsuits — down from 90% in 2016 (Swiss Re Behavioral Social Inflation Study)
- 76% of respondents say damages awarded are too low or just right — signaling nuclear verdicts will keep climbing (Swiss Re)
- Social inflation is now migrating from commercial auto into personal auto and umbrella lines (S&P GMI)
- Commercial auto loss severity has more than doubled since 2015
- The takeaway: Carriers can’t price their way out of this. Early risk identification before legal representation enters the picture is the only reliable lever
The numbers only tell part of the story. What’s driving this surge also correlates to the breakdown of trust between the industry and those it serves. On Clearspeed’s Trust Talks podcast, Richard Wolff, Managing Director of Casualty Claims at Markel explains that things go off the rails when a segment of the population begins taking significant advantage of that system. That dynamic fuels a cycle: as costs rise and claims become more adversarial, insurers respond with more scrutiny and friction. Claimants, in turn, grow more likely to seek legal representation early. And once an attorney enters the picture, the entire trajectory of a claim changes.
Wolff also identified something the industry doesn’t talk about enough: the defense side has historically been poorly coordinated compared to the plaintiff’s bar. Plaintiff attorneys share information, build centralized case repositories, and operate cooperatively. The defense side has largely not. That asymmetry is part of why organized fraud schemes have been so difficult to combat. His prescription is for carriers and their counsel to shift from purely competitive to “cooperatively competitive.” The conclusion here is that the industry’s relationship with the public is at a critical inflection point, and rebuilding it starts well before the courtroom.
Fraud is scaling with claims volumes
Insurance fraud continues to be one of the most significant cost drivers across the industry, costing the U.S. an estimated $300 billion per year nationally. It is equally as significant in the U.K. market where the Association of British Insurers (ABI) identified £1.16 B ($1.54B) worth of fraudulent general insurance claims in 2024 (a 12% rise from the previous year). This volume impacts both insurers and policyholders through higher premiums.
Fraud is particularly severe in areas where claims volume is highest. In Florida alone, $40-50 billion annually are accounted for – with 15% of U.S. homeowners claims and 71% of all homeowners claims-related litigation.
Catastrophic (CAT) events create an ideal condition for fraudsters to strike. Large scale disasters are peak times for many to take advantage of staged losses, exaggerated damages, roofing fraud, assignment of benefits (AOB) abuse, and personal injury protection (PIP) scams. In just 2025, global CAT losses hit ~$107B in 2025; California wildfires alone projected ~$40B in insured losses. This influx of CAT volume overwhelms traditional SIU capacity, and manual triage processes struggle to scale to meet demand. As backlogs grow, it’s not just the volume, the trade-off on speed versus accuracy is the concern; insurers are more likely to accept compromise as a means to getting claims settled quicker. Having a solution that helps insurers quickly and accurately triage for risk at initial notice of loss is increasingly important to scaling efficiently while better meeting customer needs, when both are most vulnerable
What high-performing carriers are doing
As pressures mount, there is a divide between carriers who are modernizing and those who still rely on traditional, manual workflows. Research from the WTW indicates that AI and advanced analytics are quickly reshaping underwriting, claims triage, and fraud detection across the P&C industry (WTW Insurance Marketplace Realities 2026). Those who are investing in end-to-end technology platforms are experiencing measurable operational improvements. They are achieving faster settlements, lower litigation rates, and improved customer retention.
But, most carriers still lack this maturity. Based on the State of Claims Maturity 2026 report, most still lack consistent, technology-enabled triage frameworks (ValueMomentum 2026) that would help them identify risk early on in the process.
Leading carriers are responding by deploying artificial intelligence or other risk assessment tools directly at the earliest stages of the claims process. This allows them to fast-track low-risk claims for rapid settlement while routing high-risk claims for investigation. When done correctly, they are settled before costs begin to compound.
How Clearspeed fits
In 2025 alone, 757 regulatory changes were tracked in the U.S.— carriers need tech that scales compliance alongside claims efficiency.
Clearspeed provides a critical intelligence layer early in evolving P&C claims processes – and at any touchpoint throughout. The voice-based risk assessment technology has already been proven at enterprise scale. For example, Allianz has reported identifying £93 million ($123.8 M) in fraudulent claims in the first half of 2025, with Clearspeed playing a significant role in helping claims teams detect suspicious activity earlier in the process.
Clearspeed can be deployed across any line of business, including personal auto, commercial auto, homeowners insurance, and catastrophe claims – the three lines under the most pressure in 2026. It also ensures:
- Low-risk claims are fast-tracked for settlement → reducing unneeded claims scrutiny and cost, while improving customer experience
- High-risk claims are flagged with detail → leading to earlier intervention and more efficient investigations
Early risk identification, scalable fraud detection, and intelligent claims triage will play a central role in protecting underwriting margins and improving policyholder experiences in the years ahead.
