US Update: We Just Had Our Best Year in Two Decades. That’s Exactly Why I’m Worried.

I’ve been in this industry long enough to know that a great year can also be a warning sign more than a celebration.

2025 gave P&C carriers their best combined ratio in almost two decades — down in the low-to-mid 90s, a level most of us haven’t seen in nearly twenty years.

And for the first half of 2026, underwriting income nearly tripled from the same period in 2025, improving the combined ratio by four percentage points to 92.5.

However, this improvement is deceiving.

As AM Best notes, catastrophe losses accounted for 6.2 points of the six-month 2026 combined ratio, down from an estimated 10.8 points in the first half of 2025, when the industry was impacted heavily by the California wildfires.

Also driving the net underwriting gain was a 3% increase in net earned premiums and a 5% decline in losses incurred and loss-adjustment expenses.

The improvements do not address foundational underwriting capabilities and underlying challenges.

With AM Best, Fitch, and S&P all projecting further rate softening, the combined ratio could drift back up toward 97-99% or higher if the second half brings large catastrophes.

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