Monthly Archives: May 2026

Insurance Industry

Steady Workers Comp Performance Masks Uneven Industry Realities

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By William Nibbelin, Head of Industry Data and Actuarial Science, Triple-I 

While the workers’ compensation line continues to demonstrate remarkable resilience, underlying metrics indicate carriers must move beyond national averages to maintain long-term underwriting stability, according to the NCCI Annual Insights Symposium (AIS) 2026 – a key event for the workers’ comp industry.

“There’s not a single number that defines the workers’ compensation system,” said Donna Glenn, NCCI chief actuary, in her remarks on the NCCI State of the Line report. “Behind this year’s 91 combined ratio, factors such as industry mix, state differences, and carrier variation are all shaping results.”

Glenn added that insurers must interrogate the data and question these outcomes “to deliver deeper, actionable insights.”

State Differences

The workers’ comp system operates as a collection of unique jurisdictions with independent statutory frameworks and distinct economic exposures, creating variations in performance across states. NCCI acts as the licensed rating, advisory, and statistical organization for workers’ comp in most states, with California and New York being notable exceptions. Together, NCCI-rated states, alongside California and New York, make up 80 percent of the workers’ comp marketplace.

California results heavily skewed national reporting, with the state’s private-carrier accident-year combined ratio totaling 129 in 2025. Claims in the state can remain open after five years, at three times the national average, which has fueled a sharp escalation in cumulative trauma (CT) claims. Such claims now represent over 25 percent of all indemnity claims in the state, compared to a stable average of less than 5 percent across NCCI jurisdictions.

Litigation is another key driver, as more than 90 percent of CT claims in California become litigated. The transition to virtual case hearings has also allowed specialized legal firms to expand their reach statewide. Consequently, the California bureau filed a substantial 10.4 percent rate increase for late 2026.

In contrast, New York approved a loss cost decrease of 21.9 percent, effective late 2026, marking 10 consecutive years of downward rate adjustments. Workers’ comp writers in New York file for rate changes differently than those in California. In New York, they are required to use the New York Compensation Insurance Rating Board loss costs and, therefore, are only able to file loss-cost multipliers when filing for a rate change. In California, they can file loss costs in addition to their loss-cost multipliers.

New York also enforces strict medical treatment guidelines, generic drug formularies, and capped medical fee schedules that require extensive regulatory processes to alter.

On the exposure side, New York has experienced a noticeable post-pandemic structural shift in its economy. While overall total private sector jobs rose to 8.5 million, higher-risk sectors like construction and retail shrank by 7 percent and 9 percent, respectively, since 2019.

Regulatory Impacts

Looking at other states,Nevada was used as an example of how standalone statutory mechanisms impact actuarial trends. The state filed a standalone 21.6 percent loss cost increase for early 2026, an extreme outlier within NCCI states, driven by new state regulations. Senate Bill 317 effective October 1, 2026, will raise Nevada’s long-standing statutory cap limit on exposure reporting of $36,000 of an employee’s payroll to approximately $100,000.

Local medical and administrative delivery systems also impact state performances. NCCI actuaries evaluated temporary disability duration across claims closed within two years and observed substantial state-by-state disparities:

  • Low Duration States (e.g., Oregon, Vermont): 6–7 weeks on average.
  • High Duration States (e.g., the Carolinas, Georgia): 15 weeks on average.

Local care protocols, administrative efficiency, and attorney involvement amplify these disparities, with durations of litigated claims averaging six months longer than non-litigated counterparts.

“The time to close a workers’ compensation claim shows wide variation across jurisdictions: an additional 9 to 25 weeks after all medical services have been delivered”, said Raji Chadarevian, NCCI executive director for actuarial research. “That can have a meaningful impact on the cost of the claim.”

Industry-Specific Trends

At an industry level, claim trends diverge significantly from national averages:

  • Construction remains the largest industry sector by premium volume at 27 percent and achieved the largest drop in claim frequency at approximately 7 points between 2023 and 2024. Frequency decreased across each of its 10 largest job classifications, though medical severity remained the highest of any industry sector, driven by severe fall-from-height hazards. Notably, medical claim severity rose by a substantial 13 points between 2023 and 2024, with over half of the top ten construction classes reporting double-digit severity increases.
  • Health Care is, on average, a higher-frequency industry. Breaking from historical declines, claim frequency increased slightly in 2024, driven by significant multi-year employment growth that introduced a high volume of inexperienced, short-tenured workers. This was the sole sector that meaningfully contributed to job growth in 2025.
  • Office & Clerical roles are a historically low-frequency, low-exposure sector. Following a significant drop in frequency in 2020 due to widespread pandemic-related remote work, and a subsequent rebound in 2021, frequency decline has continued to outpace most other sectors. However, the sector recorded a slight increase in frequency in late 2024, primarily from a spike in motor vehicle accident claims for clerical workers whose professions involve driving.

Learn More:

Core Drivers and Emerging Risks for Workers’ Comp

Triple-I State of the Line Issues Brief: Workers’ Comp (members only)

Facts + Statistics: Workplace Safety/Workers’ Comp

Spotlight On: Workers’ Compensation

Insurance Industry

Core Drivers and Emerging Risks for Workers’ Comp

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By William Nibbelin, Head of Industry Data and Actuarial Science, Triple-I 

Factors driving stability in the workers’ compensation line were a central focus at the NCCI Annual Insights Symposium (AIS) 2026 – a key event for the workers’ comp industry. In aggregate, workers’ comp welcomed its 11th consecutive year of net underwriting profitability in 2025, continuing to outpace the broader property/casualty industry.

Alongside this success, industry leaders and actuaries provided insights into the underlying trends and emerging risks to watch going forward for the line.

Key Findings

  • Premium: Workers’ comp net written premium decreased by 1.5 points in 2025, to $45.6 billion. For private carriers, this decrease was 0.2 points, to $41.6 billion.
  • Changes in premium include a 6-point decline in 2025 bureau loss costs and payroll growth of 4.8 points, comprising 0.5 points in employment and 4.3 points in wage rate.
    • Despite an overall decrease in premium, the residual market share declined to just 5 percent in 2025.
  • Profitability: The 2025 calendar year net combined ratio of 92.8 was an increase of 4.0 points over 2024 at 88.8. For private carriers, the net combined ratio of 91 was an increase of nearly 5 points over 2024 at 86, marking 12 consecutive years of underwriting gains. The accident year combined ratio of 102 is projected to develop downward by 5 to 6 points based on historical reserve experience.
  • Reserves: NCCI estimates a net redundant industry reserve position of $14 billion for private carriers.
  • Severity Trends: Both medical and indemnity severity increased by 4 points in 2025.
  • Frequency Trends: Lost-time claim frequency decreased by 2 points in 2025, compared to a decrease of 5.9 points in 2024. This represents a more moderate decrease in frequency compared to the long-term average annual decline of 3.8 points.

Economic Uncertainty

NCCI filed a 5 percent decrease in loss costs effective in 2026, marking the 13th consecutive year of declines. These results are a product of rising payroll and long-term frequency improvements, coupled with favorable reserve development expectations, which together have outpaced severity increases.

However, underwriting margins face clear headwinds from economic uncertainty, including the significant rise in energy prices and the potential for stagflation. In a stagnant economy, businesses stop growing, unemployment rises, and prices increase.

Yet, as NCCI Practice Leader and Senior Economist Stephen Cooper noted, the economy has remained resilient in 2026, despite these risks.

“Employment growth on a month-to-month basis has been volatile over the past year, with most growth concentrated in one sector,” Cooper explained. “Overall, however, the labor market remains in balance, as both supply and demand have evened out and there have been early signs of the labor market potentially strengthening in 2026.”

Evolving Risks

The symposium highlighted several structural and technological changes altering the nature of workers’ comp risk:

Pain Management: Pain management protocols have increasingly shifted toward holistic treatment methods, including extended physical therapy and topical solutions. Major surgery utilization has dropped by 8 points since 2016, whereas physical therapy utilization has expanded considerably, driven by a greater intensity of procedures per session, rather than an increase in session frequency.

Delivery of Care: Medical benefits are heavily impacted by the broader U.S. healthcare delivery system. Over the past decade, private equity firms have invested more than $1 trillion into independent ambulatory surgery centers, specialty practices, and outpatient clinics. Simultaneously, massive hospital networks are consolidating or restricting health care access in rural communities. These changes contributed to a 5-point drop in the share of workers visiting emergency departments on the day of their injury.

Remote Work: Work-from-home options are increasingly used as “reasonable accommodations” for injured employees in some industry sectors. By eliminating commuting constraints, remote work structures allow injured employees to perform tasks virtually, mitigating lost-time indemnity claims.

AI: Beyond general system performance optimization, AI tools are being deployed for early-stage claim triage, automated medical bill auditing, and identification of potential litigation vulnerability. NCCI has also instituted formal governance structures for digital assets and initiated programs that leverage machine learning models to streamline the risk classification code assignment process.

Aging Workforce: Employees aged 55 and older now account for nearly one-quarter of the total labor force, a segment that will expand over the next decade. While the experience of older workers minimizes injury frequency, their physiological responses are more complex, yielding higher average medical costs and prolonged recovery periods.

“Demographic forces help to shape the workers’ compensation claim environment,” said Paul Hendrick, NCCI Practice Leader and Senior Actuary. “Factors such as employee tenure or the aging workforce are not abstract economic concepts; they have a real, tangible impact on the nature and frequency of claims that occur every day in the workers’ comp system.”

Learn More:

Steady Workers Comp Performance Masks Uneven Industry Realities

Triple-I State of the Line Issues Brief: Workers’ Comp (members only)

Facts + Statistics: Workplace Safety/Workers’ Comp

Spotlight On: Workers’ Compensation

Cyber Risk, Insurance Industry

Bridging the Cyber Risk Resilience Gap Among Insurance Carriers

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By Lewis Nibbelin, Research Writer, Triple-I

Insurers bring considerable expertise to the cybersecurity landscape to help their commercial customers manage this growing risk, but even they are not immune to the threat. A new study from Triple-I and breach recovery company Fenix24 explores how insurers are managing cyber risk within their own operations and where gaps remain as attacks evolve.

Based on interviews with insurance industry executives across various organizational sizes and market segments, the study explains that, while most firms have invested in robust security practices, vulnerabilities persist in areas such as security testing and recovery readiness.

Though many insurers, for instance, reported maintaining immutable backups – i.e., files that cannot be altered and are thus protected from malicious action – definitions for such backups are not universally accepted, meaning standards for one company may not meet those of another. System updates to security weaknesses are similarly variable, with half of the participants indicating they deploy security patches monthly.

“Traditional compliance frameworks don’t move at the velocity of ransomware actors,” said Mark Grazman, Fenix24 CEO and co-founder, in a recent Executive Exchange with Triple-I CEO Sean Kevelighan. “When an organization gets on the phone and tells us, ‘Don’t worry, our data was immutable and therefore survived,’ there’s an 84 percent chance they’re wrong.”

While effective cyber resilience strategies will balance investments in both threat resistance and recovery, Grazman pointed out that “over 90 percent of budgets” are allocated to resistance alone, further reflecting organizations’ false sense of security in preexisting infrastructure against dynamic attacks.

“I’d liken it to, you have a fire extinguisher in the building, but you also have a fire escape,” Grazman said. “Having the focus to resist the attack does not preclude the need to make sure that, if an attack is successful, the organization can bring itself back online and keep its data.”

For large ransomware incidents as well as smaller-scale email compromises, Grazman emphasized that most attacks begin with identity hacking. Though all insurers in the report said they use corporate password vaults and require multi-factor authentication or hardware tokens for administrative accounts, several revealed they still allow less secure methods, exacerbating systemwide exposure.

Noting the convenience of such practices, Grazman encouraged organizations to “assume if the administrator can do it, so too will the threat actor.”  He added, “You’ve got to make it so even your own team couldn’t delete data without a very fixed time clock.”

Grazman recommended insurers uphold security practices that meet or exceed the minimum requirements they impose on policyholders, saying, “We need our carriers to continue doing what they’re doing and lead the pack in terms of resiliency, recovery, and setting a standard for themselves and their insureds that keep us all safer.”

Consumers and government also play a role in managing cyber risks, Kevelighan said, especially as businesses become more globally interconnected. He explained that just one sophisticated attack “could potentially generate billions and billions of dollars of losses, if not trillions,” as the disruption propagates across multiple businesses along a supply chain.

While cyber insurance can help mitigate these impacts, Kevelighan noted that many remain unaware of the coverage, necessitating greater outreach to stakeholders on coverage options and benefits.

Learn More:

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Executive Exchange: Insuring AI-Related Risks

Catastrophes, Disaster Preparedness, Disaster Resilience

Contractor Fraud After Disaster: A Persistent Challenge in the Recovery Process

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By Loretta Worters, Vice President – Media Relations, Triple-I

Every major disaster exposes the same reality: recovery is not only about repairing physical damage, but also about navigating a complex and often fast-moving marketplace of contractors, vendors, and service providers.

In that environment, most contractors are legitimate professionals helping communities rebuild. But alongside them, a smaller group of bad actors repeatedly takes advantage of urgency, confusion, and emotional stress to exploit homeowners.

Contractor fraud is not a new phenomenon. What makes it especially concerning is its predictability. After storms, floods, wildfires, and other large-scale events, contractor fraud tends to follow the same pattern, targeting the familiar vulnerabilities in the recovery process.

During Contractor Fraud Awareness Week (May 18–22, 2026), the Insurance Information Institute (Triple-I) and the National Insurance Crime Bureau (NICB) are highlighting this recurring and financially damaging form of fraud and the role it plays in complicating disaster recovery.

At a time when severe convective storms, hurricanes, wildfires, and other catastrophes continue to generate significant property losses, fraud becomes an added layer of disruption. It increases costs, slows recovery, and undermines trust in the rebuilding process itself.

Fraud exploits the urgency of recovery

The conditions after a disaster are uniquely favorable to fraud. Homeowners are often displaced, dealing with insurance claims, and trying to restore basic stability as quickly as possible.

Unscrupulous contractors rely on that urgency. They may appear unsolicited at a homeowner’s door, distribute flyers in affected neighborhoods, or advertise rapid repair services online. Their offers are often framed as time-sensitive opportunities requiring immediate action.

The result can be rushed decisions, limited vetting, and agreements signed under duress rather than informed review. According to NICB, reported cases of contractor fraud have increased 38% in the past three years.

“Contractor fraud remains one of the most common schemes reported after major storms and catastrophes,” said David J. Glawe, president and CEO of NICB. “These bad actors prey on families when they are most vulnerable, often leaving behind incomplete work, poor workmanship and financial hardship.”

Why slowing down matters

One of the most important protections against contractor fraud is also one of the most difficult to apply in real time: resisting urgency.

After a loss, the instinct to restore normalcy quickly is entirely understandable. But speed without verification can create long-term consequences that are far more costly than a brief delay in decision-making.

“After a disaster, homeowners are often under tremendous pressure to make repairs quickly, which can make them vulnerable to dishonest contractors,” said Sean Kevelighan, CEO of Triple-I. “Taking time to verify credentials, compare estimates and carefully review contracts can help homeowners avoid costly scams during the recovery process.”

Fundamentally, fraud prevention in this space is about process discipline: verifying licensing and insurance, obtaining multiple estimates, documenting terms clearly, and ensuring no payments are made under pressure or before work is completed.

Strengthening industry and law enforcement response

While consumer awareness is essential, contractor fraud is also a system-level challenge that requires coordinated industry and law enforcement response.

NICB is expanding its efforts this year with five days of training opportunities for insurance carriers and law enforcement. These sessions focus on identifying and investigating patterns of fraud in areas such as hail damage, water mitigation, mold, and general property claims.

The organization is also working with state policymakers to support official recognition of Contractor Fraud Awareness Week. Over the past five years, 35 states and Puerto Rico have formally recognized the initiative, reflecting growing recognition of the issue at the state level.

In parallel, NICB is broadening public outreach through a national media tour across more than 20 television markets, a public service announcement campaign reaching more than 100 markets nationwide, and ongoing social media engagement designed to improve consumer awareness and prevention.

A shared responsibility in resilient recovery

Disaster recovery depends on more than insurance claims and construction capacity. It depends on trust, information, and informed decision-making at the point of repair.

Fraud undermines that system and increases costs for consumers, slows rebuilding, and diverts resources away from legitimate recovery efforts.

Addressing fraud requires sustained attention from insurers, law enforcement, policymakers, and consumers themselves. While no single intervention eliminates the risk, awareness and due diligence remain the most effective tools available to homeowners.

Consumers who suspect contractor fraud or insurance fraud should contact their insurance company, local law enforcement, or the National Insurance Crime Bureau at 800-TEL-NICB (800-835-6422). Tips can also be submitted anonymously by texting TIP411 with keyword “FRAUD.”

More information and resources are available at NICB’s Contractor Fraud Awareness Week resource center: https://www.nicb.org/CFAW

Auto Insurance, Business Insurance, General Liability, Homeowners Insurance, Insurers and the Economy, Market Conditions, Workers Compensation

U.S. P/C Market Records Hard-Earned Decade-Low Combined Ratio

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By William Nibbelin, Head of Industry Data and Actuarial Science, Triple-I 

After years of significant financial strain, the U.S. property/casualty (P/C) insurance industry is showing strong signs of recovery and stabilization. According to the latest Insurance Economics and Underwriting Projections: A Forward View report from Triple-I and Milliman, the industry’s net combined ratio (NCR) reached its lowest level in more than a decade in 2025, reflecting improved underwriting conditions as the sector navigates the tail-end of post-pandemic economic volatility and hyperinflation.

Economic Outlook

While the industry maintains demonstrated resilience, the economic environment signals greater uncertainty. Real GDP growth slowed to 2.0 percent in the first quarter of 2026, while inflation remained above the Federal Reserve’s target at 3.3 percent in March. Triple-I Chief Economist and Data Scientist Michel Léonard, Ph.D., CBE, emphasized the cost drivers behind these results, explaining they “should be viewed in the context of the significant financial strain insurers have faced in recent years.”

“Although conditions have stabilized somewhat, insurers continue to operate in an environment marked by elevated catastrophe risk, higher claims severity, and ongoing economic uncertainty,” Léonard said. “Insurance employment declined 1.8 percent year over year in March, underperforming the broader labor market and reflecting continued weakness in sector employment conditions. Meanwhile, higher energy prices and persistent inflationary pressures continue to strain household and business finances.”

A critical factor for future growth is monetary policy. Forecasts for 2027 and 2028 hinge on the Federal Reserve’s interest rate decisions, with a holding pattern currently in place as the market monitors unemployment rates as a barometer for potential rate cuts.

Personal Lines Underwriting Results

The 2025 recovery was most visible in personal lines, which achieved a dramatic turnaround from supply chain-driven losses following the pandemic.

  • Personal Auto: This segment reported a 2025 NCR of 91.8, a 3.5-point improvement from 2024. Net written premium growth slowed to 4.0 percent, its lowest level since 2021.
  • Homeowners: Despite an active catastrophe year, including the Los Angeles wildfires in the first quarter, underwriting performance improved significantly. The 2025 NCR of 88.1 was the lowest in over a decade, aided by easing replacement cost pressures and prior pricing discipline.

Commercial Lines Underwriting Results

While property lines flourished, certain commercial lines face ongoing challenges:

  • Commercial Auto and General Liability: These are the only major lines with an NCR above 100 in 2025. Jason B. Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, explained that “litigation pressures and claims severity trends continue to result in elevated loss costs, constraining improvement in these segments despite broader industry strength.”
  • Workers’ Compensation: This line remains a pillar of stability, with projected combined ratios in the low 90s through 2028. For 2025, the preliminary combined ratio is 91, at  “an increase of about 5 points from the prior year,” said Donna Glenn, chief actuary at the National Council on Compensation Insurance (NCCI). Glenn added this change “is primarily due to an increase in the loss and underwriting expense ratios.”

Forward View

Underlying P/C growth for the first half of 2026 is forecast at -3.7 percent, a significant dip from the 1.6 percent growth in 2025. A recovery is anticipated beginning in 2027.

Replacement costs are a primary area of concern for long-term pricing. Triple-I Chief Insurance Officer Patrick Schmid, Ph.D., noted, “replacement costs moderated significantly from their 2022 peak, but our forecasts show them re-accelerating through 2028 and eventually outpacing overall U.S. inflation.”

While property lines have strengthened, Schmid cautioned that “the industry faces a challenging road ahead with elevated catastrophe exposure, economic uncertainty, and persistent claims-cost pressures.”

New Deep-Dive Resource

To provide members with more granular insights, Triple-I has launched State of the Line Issues Briefs, a monthly series focusing on the nuances of individual segments. These deep dives are designed to help members navigate specific strategic planning challenges beyond high-level quarterly forecasts. In an addendum to the briefing, Triple-I shared key findings from these reports.

For the farmowners’ line, analysis revealed the producer price index for commercial machinery repair acts as a high-correlation leading indicator for premium changes. Additionally, a major structural shift was identified in fire and allied lines, where the standard market share dropped from 66.7 percent in 2016 to just 52.7 percent in 2024, as premiums migrated toward the excess and surplus and residual markets.

Catastrophes, Disaster Preparedness, Disaster Resilience, Flood Insurance, Floods, Regulation, Risk-Based Pricing

NFIP Proposals Highlight Urgency of Collective Action on Resilience

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By Lewis Nibbelin, Research Writer, Triple-I

Proposed reforms to FEMA’s National Flood Insurance Program (NFIP) would expand the role of private insurers in the flood market as part of a broader push for state and private sector participation in long-term disaster management and resilience.

Congress established NFIP in 1968, at a time when few private insurers were willing to write flood coverage. While private participation in the flood market has grown in recent years, NFIP has continued to cover more than half of all U.S. homeowners with flood insurance.

In their report released May 7, the FEMA Review Council described NFIP as “unsustainable” and “burdened by over $20 billion in debt” due to its “one-size-fits-all” approach to flood mapping, which “does not fully capture current or emerging flood hazards” on national and local scales. These shortcomings have contributed to inadequate insurance pricing and flood risk misconceptions among homeowners, exacerbating low flood insurance take-up rates in at-risk communities, the report said.

To ensure the availability of comprehensive flood protection, the report recommended establishing a depopulation program or a centralized flood insurance marketplace to shift more policies into the private market. Risk-based pricing for NFIP policyholders can also incentivize private involvement, the report said, as premiums adjust to reflect actual risk.

This transition builds upon NFIP’s Risk Rating 2.0 reforms, which aimed to make premium rates more actuarially sound and equitable by better aligning them with individual, property-level risk. As NFIP rates became further aligned with principles of risk-based pricing, some policyholders’ prices fell as many others rose, which boosted private market opportunities. Updates to the reforms based on new data could attract even greater private participation, the report said.

Private coverage gaps

Though flood was once considered an “untouchable” risk for the private market, advanced analytics capabilities and data sources have helped give them the comfort and flexibility they need to write the coverage. Federal regulations introduced in 2019 also allowed mortgage lenders to accept private flood insurance if the policies abided by regulatory definitions, propelling double-digit growth in private appetite.

Despite growth, private companies currently write only 27 percent of the flood market. Roughly 4.7 million homeowners have flood coverage through NFIP nationwide.

Mark Friedlander, Triple-I’s senior director of media relations, told USA Today Florida Network that private insurers are unprepared to take on all the risk NFIP covers, especially as flood risk severity rises.

“While private flood insurance is growing, NFIP remains vital for providing widespread, actuarially sound coverage against damages excluded from standard homeowners policies,” Friedlander said.

Ahead of a temporary NFIP lapse in 2025, a letter penned by organizations across the risk and insurance industry suggested the program’s absence “could further impact affordable housing, create additional challenges for small businesses, unnecessarily further increase the cost of homeownership, and must be avoided.”

Resilience key to insurance availability

For communities that invest in floodplain management, disbanding NFIP could disqualify homeowners from flood insurance premium discounts. FEMA currently incentivizes such practices through its voluntary Community Rating System, which rewards NFIP policyholders with corresponding discounts as high as 45 percent.

At a meeting with the FEMA Review Council before the 2025 lapse, NAIC members expressed support for these mitigation initiatives, with North Dakota Insurance Commissioner and NAIC Past President Jon Godfread adding “state insurance regulators are committed to expanding access to flood insurance through both the NFIP and private coverage.”

The recent restoration of FEMA’s Building Resilient Infrastructure and Communities (BRIC) program underscores the benefits of such multi-sector collaboration. Before its cancellation last year, the program had allocated more than $5 billion for investment in mitigation projects to alleviate human suffering and avoid economic losses from floods, wildfires, and other disasters.

Reinstated with several new rules to improve its impact, BRIC also “isn’t a perfect program, but it’s a necessary one,” said Daniel Kaniewski, CEO of Northstar Risk & Resilience, a former FEMA deputy administrator, and a Triple-I non-resident scholar. Though changes to the program may drive smarter resilience investment, he cautioned that “BRIC alone – or any federal program on its own – isn’t going to close the nation’s disaster resilience gap.”

“It’s going to take community leaders, emergency managers, businesses, nonprofits – and, of course, the insurance industry – pulling in the same direction,” Kaniewski said. “The burden can’t exclusively fall on property owners and federal taxpayers.”

Insurers have worked hard to develop partnerships that address these challenges. Strengthen Alabama Homes, for instance – financed by the insurance industry with more than $86 million in grants since 2016 – offers homeowners’ insurance discounts for those who build or retrofit their homes to voluntary IBHS construction standards for wind and hail resilience, prompting numerous states to implement their own programs.

Incentives and public-private collaboration will be critical to keeping insurance affordable and available amid the mounting toll of extreme weather. Swiss Re data indicates flooding, wildfires, and severe convective storms drove a record 92 percent of total global natural catastrophe insured losses in 2025, fueling a “decades-long trend of rising baseline risk.”

Learn More:

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Health & Safety, Market Conditions

Pet Insurance: A Growing, Diversifying Line

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By Lewis Nibbelin, Research Writer, Triple-I

Pet ownership in the United States has steadily grown in recent decades, climbing to 95 million households with at least one pet in 2025, according to the American Pet Products Association (APPA). Alongside the rise in ownership, the APPA projects $165 billion being spent on pet care in 2026 alone, continuing a trend of rising pet industry expenditures since 2018.

But from unexpected veterinary costs to greater liability concerns, pet companionship introduces a range of new risks. Triple-I’s latest Issues Brief identifies steps pet owners can take to keep their pets safe and healthy, which a growing market of property/casualty and specialty insurers are helping facilitate through pet insurance.

Reported and tracked as its own business line as of 2024, the pet insurance market has expanded by more than 10 percent every year since 2018, based on Triple-I analysis of S&P Global Market Intelligence data. Direct premiums written last year also hit a record high at $5.47 billion, with most of the largest insurers experiencing double-digit premium growth in 2025.

Despite growth, however, the North American Pet Health Insurance Association reported that fewer than 4 percent of pets are insured, suggesting many pet owners remain unaware of available coverage options or of the long-term value these protections can ensure.

Meeting individual pet needs

While policies vary, pet insurance typically covers only accidents (encompassing injuries, such as broken bones) or both accidents and illnesses (such as infections and cancer). Many insurance plans include hereditary and congenital condition coverage for policies in force. Plans are priced based on risk factors like age, gender, and breed.

Though most pet insurers exclude pre-existing health conditions from coverage, some will no longer assess a condition as preexisting if the condition is curable and the pet is symptom-free for some period, typically ranging from 180 to 365 days. Separate pet wellness plans can also cover preventive health care, including vaccinations and annual exams.

Unlike property/casualty coverages, most pet insurance policies work on a reimbursement basis, meaning policyholders must pay up front for services and then submit a claim to their insurer. Only once claims are submitted can the insurer pay for some or all of the service by reimbursing the policyholder.

Beyond alleviating the immediate burden of veterinary prices – which can amount to tens of thousands of dollars over a pet’s lifetime, according to the American Veterinary Medical Association – insurance can help owners keep their pets healthy longer, mitigating greater costs as the pet ages.

As coverage options continue to expand, pet insurance has evolved into a more flexible and comprehensive product, making it important for pet owners to compare policies carefully and understand how coverage, reimbursement, and exclusions work. Reviewing these options with an insurance professional can help pet owners decide what works best for their unique pet.

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Catastrophes, Coastal Property, Disaster Preparedness, Disaster Resilience, Hurricane, Regulation, Risk-Based Pricing

N.Y. Natural Catastrophe Exposure Highlights
Risk-Based Pricing Benefit

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By Lewis Nibbelin, Research Writer, Triple-I

New York may be less exposed to frequent natural catastrophes than states like Florida or California, but it is far from immune to massive catastrophe losses.

A recent white paper by risk modeler Karen Clark & Co (KCC) cautions against underestimating the Empire State’s vulnerability – or that of other states not typically identified with large-scale natural disasters. A future 1-in-100-year hurricane event in New York could cost insurers more than $100 billion, KCC reported, with a 1-in-250-year event potentially costing twice as much.

“Beyond hurricanes, New York also experiences substantial impacts from both severe convective storms and winter storms, which together generate almost $1 billion in average annual property losses in the state,” KCC notes.

As state lawmakers consider strengthening requirements for prior approval of premium rate increases to rein in rising costs, KCC suggests that cost reduction strategies that account for these potential impacts would help ensure “property insurance remains both available and affordable.”

Underlying cost drivers

New York is exposed to nearly $9 trillion in potential insured losses, $6 trillion of which is concentrated along the coast. Contributing factors include property location and associated rebuilding costs, demonstrating, in part, demographic shifts placing more people in harm’s way, KCC said.

“Even if rates remain constant, premiums will rise over time to reflect the increasing cost of construction,” the report said. It added that such costs for an average single-family home have doubled over the past decade.

With trillions in loss exposure, the state faces outsized impacts, even from less intense storms. For instance, Hurricane Sandy in 2012 – despite making landfall in New Jersey as a Category 1 storm – generated almost $10 billion in insured losses in New York. Based on current exposure, insured losses in New York would exceed $13 billion, with total losses climbing to $31 billion.

A Category 3 hurricane that made landfall in the state in 1938 would produce more than $20 billion in insured losses today, KCC said. The state’s “worst-case scenario,” however, is if a similar storm hit close to Rockaway Beach in New York City, as losses in the hundreds of billions would ripple through “the most populated areas of the state.”

Sustaining market health

In testimony to the New York State Senate in November 2025, the American Property Casualty Insurance Association (APCIA) estimated that such an event “would wipe out 69 years of homeowners’ insurance return on net worth. ” APCIA noted that New York State is second only to Miami in vulnerability to a hurricane exceeding $100 billion in losses.

At the same state senate hearing, Triple-I Chief Insurance Officer Patrick Schmid testified on market adjustments insurers made in the wake of Hurricane Sandy, such as updating rates and establishing reserves for Sandy-related claims that extended beyond the year of impact.

These changes have allowed state homeowners’ insurance premiums to remain “relatively average and reasonable as a percentage of household income,” contradicting “the narrative of an affordability crisis in New York’s homeowners’ insurance market,” Schmid explained.

“In other words, the ‘profitable decade’ reflects a market that learned from a major catastrophic event and adjusted accordingly,” Schmid said. “This is how insurance markets should function.”

Importance of risk-based pricing

Insurance pricing must reflect increased risks to maintain policyholder surplus, or the funds regulators require insurers to keep on hand to pay claims. Regulatory constraints on risk-based pricing in some states have forced insurers to write fewer policies or withdraw from state markets entirely, leading to less affordable and available coverage.

Unlike its homeowners’ market, New York’s auto expenditures rank among the highest in the country, driven by repair costs as well as accident frequency and fraud, according to a Triple-I Outlook. Proposals to give New York regulators the authority to block auto premium rate changes could erode surplus and further push insurers to rethink their risk appetite in the state, which already imposes a restrictive “excess profit” law.

The role of profit in insurance pricing is not merely to reward insurers for the risks they assume. As KCC puts it, profit is “the mechanism through which insurers compensate capital providers for risk.” Rather than intervene in insurance markets, policymakers should aim to provide “a regulatory environment that allows insurers flexibility to set adequate rates.”

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Cyber Risk, Insurers and the Economy, Legal Environment, Technology

Cyber Claim Severity Surges as AI, Litigation Accelerate Risk

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By Lewis Nibbelin, Research Writer, Triple-I

Despite a 34 percent decline in cyber insurance claim frequency for large U.S. businesses in 2025, average claim severity doubled to more than $4.4 million, according to Chubb’s 2026 Cyber Claims Report. Though AI-driven detection systems helped stabilize claim frequency across several global markets, advanced cyberattacks – alongside liability litigation challenges – ranked among the top cost drivers.

Drawing on historical claims data, the report explained how bad actors have begun leveraging AI for increasingly sophisticated attacks capable of “compromising multiple systems in a matter of minutes,” including large-scale incidents that involve minimal human oversight. Data-breach claims alone exceeded a historic $10.2 million in the U.S., propelled in part by the outsized impact of individual ransomware encounters.

Becoming faster and more difficult to detect, ransomware incidents can propagate across multiple businesses along a supply chain with just one attack, especially as markets become more globally interconnected. One such event in the U.K. led to roughly $568 million in losses for the targeted company but a $1.4 billion loss for the entire supply chain as manufacturing “halted for five weeks across sites in the U.K., Slovakia, Brazil, and China.” Over 5,000 U.K organizations in total were affected, Chubb said.

Consequences of cyber incidents extend beyond these losses, the report noted, as incidents increasingly escalate to legal action, often within days and “irrespective of the size of the entity or any controls perceived to be lacking.” Federal legislation enacted in 1988 to protect physical video privacy has helped lead the trend, as plaintiff attorneys continue to reinterpret the law to apply to modern streaming and social media platforms.

Similar applications of a 1967 statute in California – originally intended to prevent wiretapping – now target businesses that use website technologies such as cookies and tracking pixels, generating thousands of lawsuits in recent years. A bill that would remove these prohibitions for businesses has garnered strong bipartisan support, though faces an uncertain future after stalling in the state legislature last year.

“At a time when affordability is already one of California’s greatest challenges, these lawsuits are quietly making life more expensive for everyone,” wrote Scott Miller, president and CEO of the Fresno Chamber of Commerce, for The Fresno Bee. “[SB 690] would restore balance, reduce abusive litigation, and allow small businesses to focus on serving their customers, not defending against opportunistic lawsuits.”

A “growing body of privacy laws” are further “imposing complex, layered obligations for companies that store and/or transfer personal data,” Chubb reported, highlighting new laws in Indiana and Kentucky aimed at implementing stricter opt-in mechanisms for personal information. Companies may struggle to navigate these emerging regulations as privacy and cyber risks continue to evolve, creating compliance concerns and potentially exacerbating losses and broader supply-chain disruptions when cyberattacks occur.

Investing in threat detection, AI governance, and employee cybersecurity education are among the many ways organizations can boost their cyber resilience. A separate Chubb survey also suggests interest in cyber insurance to mitigate these risks is rising. Leaders across lower, core, and upper middle market segments identified cybersecurity and advancing technology as their chief risk concerns, with 47 percent of respondents indicating they were considering adding or increasing cyber coverage.

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