The insurance market continues to feel the ripple effects of post-pandemic economic shifts. Interest rates have stabilized above 4% through the first half of 2025, providing insurers with stronger investment income, but the Federal Reserve cut rates in September and signaled more cuts could be coming. However, inflation remains stubbornly above the Federal Reserve’s 2% target, driving up the cost of claims across sectors — from auto repairs to medical expenses. Combined ratios have hovered at or above 97% for most of the past decade, leaving little margin for underwriting error.

Despite these pressures, the influx of capital into the market — especially in property lines — has created a more competitive environment. Still, insurers remain cautious, particularly in the face of rising loss severity and unpredictable perils.

Cyber risk remains a top concern, with ransomware, social engineering, and supply chain vulnerabilities dominating the threat landscape. The public entity section remains particularly prone to cyberattacks, ranking among the top three industries targeted by cybercriminals.

The market is cautiously firm, with increased capacity and competition, especially for entities with strong security postures. Automated scanning, continuous monitoring, and AI-driven underwriting are becoming standard. Still, legacy systems, under-resourced IT teams, and third-party risk remain persistent challenges.

Casualty lines — particularly auto liability, sexual abuse, and law enforcement — continue to be shaped by legal system abuse and evolving societal expectations. Aggressive driving, rising medical costs, and rising vehicle repair costs are driving up auto claims. Meanwhile, a cultural shift from victimhood to survivorship is increasing the visibility and litigation of sexual abuse cases. Law enforcement faces its own set of pressures: recruitment and retention challenges, mental health concerns, and heightened public scrutiny. Accreditation is gaining traction as a tool for reform and accountability.

Legal system abuse, driven by third-party litigation funding and generational shifts in jury attitudes, is compounding these exposures. Millennials and Gen Z jurors bring heightened expectations for corporate responsibility and transparency, often resulting in larger verdicts and more complex litigation dynamics.