The small business and personal lines sectors enter 2026 in a more stable position. Following several years of disruption and rate escalation, market conditions have begun to normalize. Rates are softening in some property classes, capacity is expanding and underwriting appetite is returning to segments that had become constrained.

Casualty and garage remain firmer, but even there, pricing pressures are moderating. Across the board, insurers and intermediaries are shifting their focus from corrective action to strategic growth supported by underwriting discipline, client retention and technology-enabled efficiency.

 

Property overview

After several years of compounding rate increases, the property segment is now notably softening. Rate reductions, while modest, are consistent across most territories, particularly in high-catastrophe zones. Deductibles, especially percentage deductibles in wind-exposed regions, are beginning to moderate, and new entrants are exploring select opportunities that had been inaccessible during the peak of the hard market.

Capacity growth is not confined to one region. Both admitted and E&S carriers are expanding, including experimenting with “brokerage light” structures designed to capture small and mid-sized accounts that sit between binding authority and open-market placement. Despite the easing, underwriters continue to favor detailed submissions that include updated valuations, construction data and credible loss control information.

Evolving risk factors

Natural catastrophe volatility and urbanization-driven loss exposure remain key areas of concern. Severe convective storms, once principally confined to “tornado alley,” have become a nationwide concern. In response, underwriters are deploying detailed geographic modeling to assess micro-region risk (i.e., Los Angeles hill area). Carriers are also increasing scrutiny of roof age, considering it even more important than building age in how a property responds to a wind event.

Inflation and global supply constraints continue to impact replacement costs, reinforcing the industry-wide focus on valuation adequacy. The focus has shifted from one-time corrections to ongoing valuation management as a standard underwriting discipline.

As pricing pressure eases, product innovation is reemerging, with carriers adding coverage enhancements such as cyber to spur both sales and retention. Others are experimenting with simplified renewals for small accounts under certain thresholds, automatically renewing policies that meet underwriting and loss performance criteria.

 

Personal lines homeowners

The standard personal lines homeowners’ market is stabilizing. Coverage breadth is improving, with several markets reintroducing options such as broadened water-backup coverage and replacement cost on contents. Rates are largely flat to slightly decreasing in low-cat territories, while CAT-exposed states remain under disciplined management – particularly in the western U.S. and California specifically where capacity and concentration concerns are still evident. Concentration controls continue to drive selective underwriting, with carriers carefully managing exposure accumulations by ZIP code and construction type.

Valuations, roof age and water-loss history are key rating factors regardless of location. Carriers are rewarding well-maintained properties with preferred pricing, and technology is playing an increasing role in both underwriting and claims. Automated inspection tools, aerial imagery and predictive analytics are improving efficiency and accuracy, allowing carriers to compete more effectively on speed and service rather than just price.

Admitted homeowner’s market

Admitted carriers that exited or scaled back during the hard market are cautiously returning, supported by more stable reinsurance costs. This renewed competition has driven modest pricing relief, particularly in the Southeast and Midwest, where risk concentration is lower. In California, however, carriers have not returned, leaving an almost unmanageable amount of exposure for the E&S space to fill. The E&S markets are now overconcentrated in specific areas, including LA Hills, Rancho Santa Fe and the Orange County Coast, as well as Montecito and Santa Barbara. In many of these areas the few E&S high value markets that are writing business have closed or slowed new business in an effort to avoid the concentration of risks. At the same time, some carriers are shifting guidelines, appetite and areas of focus so rapidly it can be difficult to keep up. 

E&S homeowner’s market

Overall, the E&S homeowner market continues to grow as carriers pivot away from a pure admitted approach to a hybrid approach, using E&S to service clients that are not a good fit for admitted. We are seeing insureds coming into the E&S market due to obvious reasons such as loss history or risk characteristics, but even more so from less obvious reasons like regulatory environment. This is having an impact on the supply and demand equation that exists in the marketplace, and while adequate supply remains, the additional demand is certainly having a dampening effect on the general softening seen in the market.

The main contributing factors to the current market softening are an influx of capital via reinsurance, retained earnings and new entrants, countered by the continued inflationary pressure. The Florida E&S market specifically is seeing pressure from Demotech rated Florida domestic insurers that are returning strong profits each quarter. This has not only increased their scale in the market via capital contributions from retained earnings but has brought the trust of the reinsurance market back to these companies. As such, the availability of CAT reinsurance and the associated leverage attained has meant they are able to grow even more efficiently.


High-value homeowners

In the high-net-worth homeowner’s market, capacity is returning to difficult areas, including coastal and wildfire-prone territories, as specialty carriers and MGAs enter (or re-enter) the market. Regions like South Florida, the Hamptons and the coastal Carolinas are seeing expanded participation and increased line sizes as well. However, while capacity and pricing have improved, underwriting does remain selective, with each account evaluated thoroughly.

In California, where there once was previously only a need for primary and excess layering in extreme wildfire areas, that same need can be found for high value homes in areas with moderate wildfire exposure. There are fewer markets than ever willing to take on a $10M line of exposure, and if they do, the premiums are high. 

Affluent insureds continue to show greater willingness to retain portions of risk. Sub-limits for wind, hail or wildfire exposures, paired with higher deductibles, allow clients to manage costs while keeping meaningful protection in place. For example, mortgage-driven requirements often dictate minimum coverage thresholds, prompting creative layering solutions that combine limited sublimits for catastrophic perils with full coverage for non-cat perils. Water damage is available at higher limits, particularly for insureds adopting detection and mitigation technology.


Casualty

While property softens, casualty rates continue to firm, particularly for classes affected by litigation volatility and social inflation. Accounts with clean loss histories and strong risk management practices continue to see modest renewals, while loss-driven or higher-hazard classes face additional rate pressure or coverage restrictions. Excess and umbrella markets are layering more cautiously, and attachment points have risen.

Overall, capacity remains adequate, but carriers remain wary of nuclear verdicts, third-party litigation funding and expanding plaintiff strategies that have elevated loss severity, especially in habitational, construction, hospitality and retail sectors. Markets also remain conservative on assault and battery and crime exposures; however, some are offering sublimited coverage (at additional charge) in lieu of an absolute exclusion.

Casualty underwriters continue to rely on data, including crime scores and predictive analytics, to refine pricing. The trend toward driver limitation/exclusion endorsements in commercial auto and garage continues.

 

Garage

Garage sector businesses have a specialized risk exposure and face a complex mix of liabilities, including property damage, customer vehicle damage, faulty work and test-drive accidents. For example, while dealer risks carry greater exposure due to test drives, personal use and related activities, repair and service operations that typically limit driving to short test runs around their premises often experience fewer liability (BI/PD) losses.

Rising claims and legal costs have resulted in increased frequency and severity of claims. And while the overall market remains firm, conditions vary by region and class. Dealers continue to face rate increases, although not as aggressive as those seen in 2023 and 2024. Non-dealer operations such as service and repair shops are beginning to experience slight softening. Both deductibles and rates for dealers’ physical damage and garagekeepers’ coverage remain elevated as a result of wildfire exposure, theft exposure in high crime areas and flood exclusions in flood zones. Markets are enforcing higher minimum premiums to maintain profitability; however, there are some carriers willing to offer higher deductibles to help moderate premium cost.

The admitted market has contracted sharply, shifting much of the business to surplus lines carriers. Legislative updates in several states have expanded surplus lines authority to write these risks more freely, providing stability and choice where traditional capacity had evaporated. For example, legislators in Kentucky, Kansas, Arkansas and South Carolina have all passed new regulatory statutes that allow surplus lines to offer dealer policies where they had historically been exclusive to admitted carriers. The Northeast, however, continues to be a pain-point as most states still require admitted paper for dealers.

Regulatory compliance and licensing changes have also resulted in businesses navigating state-level insurance regulations, which often mandate minimum coverage levels for operating garages or dealerships. Carriers are doing what they can to try and mitigate losses involving unreported drivers, but in many cases, regulatory restrictions can still result in financial responsibility pay-outs while non-compliance by businesses can result in fines, license suspension or business closure.

One of the most significant challenges for the garage market is the shifting economy. From 2022 to 2023, supply chain disruptions stemming from COVID made auto parts difficult to source. As a result, repair times stretched considerably, driving up costs for carriers through additional storage fees, rental cars and related expenses. While parts availability improved somewhat in 2024, inflation continues to drive up the cost of parts and, in turn, overall claim severity. Looking ahead, tariffs could present long-term challenges if they further limit availability or increase prices. With both cost and supply pressures in play, markets are taking a proactive stance on pricing, and we anticipate small, steady rate increases until broader economic conditions stabilize.

Electrification and automation are also impacting the 2026 outlook. The rise of electric vehicles introduces new fire and liability exposures, particularly for repair shops handling EV batteries. Carriers are imposing specific safety protocols and coverage limitations around EV servicing and storage. Technological advancements (e.g., advanced driver assistance systems or ADAS) also require specialized repairs which lead to higher repair costs, increased liability for incorrect servicing and the need for updated coverage and training certifications. Autonomous vehicles add another layer of uncertainty about whether responsibility for accident liability rests with human operators or manufacturers’ systems.

Changes to local licensing and regulatory restrictions are challenging businesses trying to navigate state-specific insurance regulations, which often mandate minimum coverage levels for operating garages or dealerships. These regulations also mitigate losses involving unreported drivers – and not just those that result in financial responsibility pay-outs, but those that may also include collision payments, fines, license suspension and business closure.

 

Flood

New capacity continues to enter the flood segment. While regional variation persists and some classes of business are more challenging than others, overall pricing is flat and market appetite remains healthy. Standalone residential flood options continue to grow with additional entrants into the market, and commercial flood is increasingly bundled into broader property programs. The NFIP remains dominant, though many see its rates as misaligned with real risk.

Markets looking to differentiate themselves and capture additional risk are offering broader terms and higher limits, with some carriers focusing on low-risk homes through competitive pricing. Primary flood premiums vary by region, while excess flood pricing is mostly flat, with reductions in select high-risk zones. Residential pricing remains more volatile than commercial, and a quiet hurricane season in the U.S. has supported rate stability, though inland flooding has led to isolated adjustments.

Coverage terms have held steady, but flood exposures are widening as severe weather becomes more frequent. Recent events in Texas, New Jersey and Wisconsin underscore that floods extend well beyond coastal zones. Amwins is responding through expanded offerings, reentering Florida, offering instant-bind products, and full-service underwriting for mid-size commercial risks.


Digital

Digital transformation is now foundational to the small business and personal lines ecosystem. Carriers, wholesalers and MGAs are investing heavily in automated rating platforms and submission tools to reduce manual processing. AI-powered systems are streamlining mundane tasks, freeing underwriters to focus on judgment-based evaluation. For small business and personal lines, this shift has materially improved speed to quote, accuracy and transparency.

Despite the automation gains, relationships remain at the center of success. Digital infrastructure amplifies efficiency, but trust, expertise and responsiveness still define long-term partnerships. Retail agents are adapting to this environment quickly, using technology not to replace personal interaction but to improve it—offering clients faster answers, clearer comparisons and more strategic advice.

The next phase of digital evolution will integrate predictive portfolio management. Amwins’ InstantQuote (Amwins IQ) has been instrumental in navigating this shifting landscape, using data analytics and technology to understand risk appetite, build new products and manage portfolio risk across programs.

 

Strategic renewal approach

Retail brokers should be having meaningful conversations with insureds about how they are mitigating losses – explain the importance of reporting new hires, having emergency flood plans in place for inventory vehicles and establishing theft precautions when the business is closed. When we better educate our insureds on the type of losses in their industry, they are better equipped to protect their own assets, which, in turn, could result in lower premiums and more competitive marketplace.

Retailers and insureds are encouraged to begin renewal discussions early—as many as 120 days before expiration—to allow time for marketing and differentiation. An account that is similar in risk to one that was written just 30 days before may need to be underwritten by a different carrier as the market shifts quickly.

Carriers continue to reward transparency. Those who articulate a strong risk story, supported by data, often see better coverage and pricing. Relationship strength can also be a differentiator in renewal success. Amwins’ broad market reach, specialized underwriting and digital tools equip brokers to deliver faster results, strengthen client-agent relationships and ensure renewals reinforce long-term client success.


Be on the lookout

  • Selective softening: Continued easing in property rates and deductibles outside high-cat zones, balanced by ongoing underwriting discipline.
  • Customized programs: Growth in modular high-value and standard homeowner placements tailored to risk appetite and self-insurance levels.
  • Litigation pressure: Persistent social inflation and nuclear verdicts sustaining firmness in casualty and umbrella markets.
  • Technology integration: Widespread adoption of digital submission platforms, predictive analytics and AI-assisted underwriting.
  • Emerging risk focus: Increased attention on EV and battery fire exposures, private flood expansion and valuation management amid inflation.