Global insurance rates declined 6% in the second quarter of 2026, marking the eighth consecutive quarter of decreases, even as home insurance claims severity reached an all-time high, according to Marsh’s Global Insurance Market Index and the LexisNexis U.S. Home Trends Report.
This paradox reflects the insurance industry’s transition from a hard market—characterized by rate increases and tight capacity—to a soft market, where abundant capital and competition are driving down premiums across most of the world. The rate decline cycle began around mid-2024, roughly seven years after the hard market started in 2018.
Property insurance saw the steepest declines globally, dropping 12% in the second quarter. Casualty rates bucked the trend, rising 2% worldwide, though this increase was driven almost entirely by the United States, where casualty rates jumped 7%, according to Marsh data.
Claims Severity Climbs Despite Rate Pressure
While rates have been falling, the cost of individual claims has surged. All Peril severity in home insurance reached an all-time high in 2025, climbing 25.9% from 2024 and 93.2% compared to 2019, according to LexisNexis Risk Solutions. Fire and Lightning perils were the defining story, with severity rising 67.3% year-over-year, driven largely by the January 2025 Los Angeles wildfires, which cost an estimated $61.2 billion.
The U.S. experienced 23 climate disasters with $1 billion or more in damages in 2025, totaling $115 billion in losses and marking the third-highest year of billion-dollar climate events on record. Inflation in construction materials, labor costs, and medical services has amplified the cost of repairs and settlements, pushing individual claim values higher even as the frequency of claims has declined.
This dynamic creates a challenging environment for insurers and buyers alike. While premium rates are falling, the unpredictability of catastrophic events and the rising cost of repairs mean that a single large claim can be significantly more expensive than it was a few years ago. Casualty markets in the United States remain under particular pressure, with claims severity and litigation costs driving continued rate increases in that segment, even as property and cyber markets soften globally.
Marsh’s John Donnelly, president of global placement, noted that insurers are competing not just on price but through broader coverage, expanded policy terms, and lower deductibles. However, absent a severe hurricane season or major catastrophic events, current soft market conditions are expected to persist, giving buyers additional opportunities to improve coverage while rates remain favorable—though the underlying cost of claims continues to climb.
Sources
- Marsh — Global Insurance Market Index Q2 2026 data on composite rate declines, property and casualty rate movements by region, and market cycle context.
- LexisNexis Risk Solutions — 2026 U.S. Home Insurance Trends Report detailing all-peril claims severity reaching all-time high, fire and lightning severity increases, and climate disaster costs.
- Insurance Business — Q2 2026 rate decline analysis and commentary on the eight-quarter decline cycle and global market divergence.
