Executive Summary
The insurance industry closed the summer of 2026 in a position of strength shadowed by unease. Carriers posted their best underwriting year in a decade, catastrophe losses ran far below normal, and commercial buyers saw an eighth consecutive quarter of falling rates. Beneath those headlines, casualty reserves continued to deteriorate, artificial intelligence began disappearing from liability policies, and northeastern Wisconsin absorbed its most violent tornado in decades.
- 93 — U.S. P&C combined ratio for 2025, the best in a decade
- $46 billion — First-half 2026 global insured cat losses (28% below the ten-year average)
- 6% — Q2 global commercial rate decline (8th consecutive quarter)
- 60+ — P&C groups that have filed generative AI exclusions
- 39 — Wisconsin tornadoes through mid-July, against an annual average of 23
- 95.2% — Record share of Q1 insurtech funding going to AI-focused companies
- 14% — Median proposed 2027 ACA marketplace rate increase
Wisconsin Market Update
The July 27 Fox Valley Tornado
A tornado the National Weather Service preliminarily rated EF3 struck the Fox Valley on the evening of July 27, 2026, with peak winds estimated at 140 miles per hour. It remained on the ground for 26 minutes along a 12.1-mile path up to 1,500 yards wide, tracking from roughly two miles west-northwest of Appleton south through Fox Crossing and Menasha before dissipating over Lake Winnebago.
No deaths or serious injuries were reported. Governor Tony Evers declared a state of emergency, and approximately 340,000 customers lost power.
The storm capped an extraordinary severe weather year. It was Wisconsin's fourth EF3 tornado of 2026 — the most violent tornadoes recorded in the state in a single year since 1984, according to the Wisconsin State Climatology Office. Through mid-July, Wisconsin had documented 39 tornadoes against an annual average of 23.
Insurance Commissioner Nathan Houdek issued guidance on July 28 for affected policyholders: inventory damaged items, photograph damage before beginning cleanup, retain all repair and replacement receipts, and do not discard damaged property until an adjuster has approved its disposal. OCI's complaint line is 1-800-236-8517.
Agents handling storm restoration work should know 2025 Wisconsin Act 230, which created Wis. Stat. § 632.11 governing post-loss assignment of rights or benefits under property insurance policies to residential contractors, with a penalty attached for violations. It applies directly to the roofing and restoration contracting activity that follows an event like July 27.
OCI Administrative Actions
OCI published administrative actions for May and June 2026. Forfeitures collected through these actions fund Wisconsin's Common School Fund.
- A nonresident agent from Fort Worth, Texas was ordered to pay $16,000 — the quarter's largest penalty — on multiple counts of selling unauthorized health insurance to Wisconsin consumers, providing false or misleading information, and failing to respond to OCI investigative demands.
- A nonresident agent from Coconut Creek, Florida agreed to revocation of a Wisconsin non-resident license for improperly enrolling multiple Wisconsin consumers in health plans without their authorization, consent, or knowledge.
- A Wauwatosa agent paid a $1,000 forfeiture and received one year of probation for failing to timely report a FINRA action.
- A second agent paid $500 for authorizing another agent to use that agent's National Producer Number to enroll a consumer.
- June actions included revocation of a public adjuster's registration, revocation of a license for a second application containing false information, and a $1,000 forfeiture for failing to timely disclose administrative actions in Illinois, Kansas, and Washington. Both months brought multiple revocations for delinquent Wisconsin taxes.
Group Insurance Board Sets 2027 Rates
The Group Insurance Board met May 21, 2026 and approved a weighted average premium increase of 5.0% for the state program and 8.5% for the local program for the 2027 plan year. Open enrollment runs October 5 through 30, 2026.
Effective January 1, 2027, the program applies a combined annual limit of 50 visits across physical, occupational, and speech therapy. A limited group life insurance open enrollment is planned for the state program.
The Access Guidance Services program took effect July 1, 2026, allowing non-Medicare members taking high-cost drugs to apply manufacturer copay assistance toward their cost sharing and out-of-pocket limits. Pharmacy benefit manager Navitus estimated the state's group health program would have saved roughly $28.5 million across 2024 and 2025 had the program been in place.
Workers' Compensation, Auto, and Property
As of July 31, the Wisconsin Compensation Rating Bureau's rate change for October 1, 2026 had not been announced; that decision has historically come in mid-August. Wisconsin employers have now seen ten consecutive years of rate decreases, most recently 3.2% effective October 1, 2025 and 10.5% effective October 1, 2024. The Department of Workforce Development estimated the 2024 reduction would save Wisconsin businesses roughly $206 million over the following policy year.
Wisconsin remains among the least expensive states for personal lines. Bankrate places the average Wisconsin homeowners premium at $1,303 per year for a $300,000 dwelling policy against a national average of $2,424, crediting the state's low property crime rate and limited hurricane and wildfire exposure. On the auto side, Bankrate reports full coverage averaging $158 per month in Wisconsin against $225 nationally, and minimum coverage at $38 against $68. Experian data from May 2026 puts the Wisconsin average at $1,716 per year.
Wisconsin resident agents holding any major line must complete 24 credit hours biennially, including a minimum of three ethics hours, with credits banked before license expiration. Licensees holding only limited lines are exempt. Waiver requests for medical incapacity, military duty, or other emergencies must be submitted at least 90 days before expiration; OCI responds within 30 days.
Commercial Rates Fall for an Eighth Straight Quarter
Property Leads Down, U.S. Casualty Runs the Other Way
Marsh released its Global Insurance Market Index for the second quarter of 2026 on July 23, reporting that global commercial insurance rates fell 6% on average — following a 5% drop in the first quarter and marking the eighth consecutive quarter of decreases. Marsh credited abundant underwriting capacity, strong insurer profitability, surplus capital, lower reinsurance costs, and higher investment returns.
Property led the softening at 12% down globally, while casualty rose 2%. Regional results varied widely: rates fell 16% in India, the Middle East, and Africa; 13% in the Pacific; 9% in Latin America and the Caribbean; 8% in the U.K.; 7% in Canada; 6% in Europe; and 5% in Asia. The United States composite fell 2%.
American casualty business ran against the global current. U.S. casualty rates rose 7% — and excluding workers' compensation, they increased 11% — a gap Marsh attributed to loss severity and litigation pressure.
For agents placing commercial accounts in Wisconsin, that split matters: property renewals are likely to bring relief, while general liability, umbrella, and commercial auto renewals will not.
The Best Underwriting Year in a Decade
The rate softening arrived on the back of exceptional carrier results. AM Best reported that direct premiums written across the U.S. property/casualty industry grew 5% in 2025 to approximately $1.11 trillion, and the industry combined ratio finished at 93 — an improvement of 3.6 points over 2024 and the best result in a decade. Underwriting income rose from about $23 billion in 2024 to $61.2 billion in 2025.
But the profit was concentrated in personal lines. Net underwriting income reached approximately $16.8 billion in homeowners multiperil and $28.9 billion in private passenger auto, with personal auto insurers more than doubling their 2024 result. Commercial insurers also more than doubled underwriting income to $19.2 billion — on uneven footing:
- Commercial auto remained in the red with a loss of about $1.9 billion (improved from a $4.9 billion loss in 2024), and insurers booked another $2 billion in reserve deficiencies
- Other liability (occurrence) posted an underwriting loss of roughly $11 billion, with net losses incurred reaching a five-year high near $50 billion and a combined ratio of 114.7
- AM Best identified social inflation as a continuing driver and noted that PFAS claims are developing at an accelerating pace
Auto claims data underscored the severity trend. LexisNexis Risk Solutions reported that bodily injury payments grew from under 20% of total claims dollars in 2022 to more than 26% in 2025, while bodily injury claims per 100 property damage claims rose from 24 to 29 over the same period.
M&A: The Slowest Start Since 2016
OPTIS Partners reported 292 announced insurance agency mergers and acquisitions across the United States and Canada in the first half of 2026 — down 15% from a year earlier and the slowest start to a year since 2016. Second-quarter volume fell 25% to 138 transactions.
- Private-equity-backed and hybrid buyers accounted for 76% of first-half deals
- Ten firms accounted for 45% of them; BroadStreet Partners led with 37 transactions, followed by Inszone with 33
- Of 68 unique buyers, 37 were private-equity-backed, six of them first-time acquirers
- OPTIS partner Steve Germundson judged the multi-year decline likely near its bottom, at a run rate of roughly 650 deals per year
AI Starts Disappearing from Liability Policies
The Coverage Change That Mattered More Than Any Product Launch
The most consequential technology development of the quarter was not a product launch but a coverage change. More than 60 property/casualty insurance groups have filed to adopt artificial intelligence exclusions.
ISO, a Verisk business, published standard generative AI endorsements carrying a January 2026 edition date — CG 40 47, CG 40 48, and CG 35 08 — all written for commercial general liability. CG 40 47 excludes bodily injury, property damage, and personal and advertising injury arising out of generative artificial intelligence under both Coverage A and Coverage B.
Verisk's Joe Lam explained that generative AI introduces risk considerations that may not have been contemplated when many traditional liability forms were drafted. AmTrust Financial said it is incorporating AI exclusions broadly, describing the exposure as an area of emerging aggregation risk. Verisk was separately reported in July to be weighing new exclusions addressing agentic AI risks.
Commercial clients using generative AI tools in marketing, customer service, underwriting support, or product design may find that a renewal quietly removes coverage they assumed they had. Reviewing renewal forms for these endorsement numbers — and documenting the conversation with the client — is becoming a standard file-quality expectation. Wisconsin agents should also recall that OCI's bulletin on the use of artificial intelligence systems in insurance, issued March 18, 2025 and adopting the NAIC model bulletin, remains the state's standing guidance for insurers deploying AI in regulated functions.
A Standalone AI Liability Market Begins to Form
As exclusions spread, a market has begun forming to fill the resulting gap. Testudo, a Lloyd's-backed managing general agent underwriting AI liability, began writing U.S. mid-market enterprises in early 2026. Chief executive George Lewin-Smith reported growing broker interest spanning errors and omissions, general liability, and directors and officers coverage. The pattern is familiar from the early cyber market: exclusion first, affirmative product second.
Insurtech Funding Concentrates Almost Entirely in AI
Gallagher Re's Global InsurTech Report for the first quarter of 2026 recorded total funding of $1.63 billion, down slightly from $1.67 billion in Q4 2025. The striking figure was concentration: insurtechs identifying as AI-focused captured a record 95.2% of all funding, taking $1.55 billion across 68 deals at an average of $25.79 million per transaction. All ten of the largest rounds were AI-focused. Life and health insurtech funding nearly doubled quarter over quarter to approximately $719 million, while property/casualty funding fell 31% to roughly $907 million.
Cyber Insurance Approaches an Inflection Point
Flat Premium, Rising Loss Ratio
AM Best's cyber market review, published in late July, described a U.S. market approaching an inflection point. The market's loss ratio rose for a second consecutive year in 2025, reaching 53 — the first reading above 50 since the ransomware spike during the COVID period. Total premium was essentially flat once analysts adjusted for Beazley's transfer of a block of business from an offshore entity into the United States.
Pricing continued to fall. AM Best reported that Q1 2026 marked the eighth consecutive quarter of pricing cuts in the U.S. cyber market, and cautioned that as long as pricing continues to decline, insurers will have difficulty reversing the increasing loss ratio. Third-party claims are trending up 30% and carry a longer tail.
Surplus lines carriers now account for nearly two-thirds of all cyber premium and posted an incurred loss ratio near 56 in 2025, against 50.2 for admitted carriers. Chubb held the top position among cyber insurers, though AM Best noted that Zurich's acquisition of Beazley will make Zurich the largest cyber writer measured by 2025 direct premiums.
A Quiet Half for Catastrophes — Nationally
The first half of 2026 produced the lightest catastrophe load in years. Gallagher Re reported global insured natural catastrophe losses of $46 billion, 28% below the ten-year average of $64 billion and 45% below the five-year average of $82 billion — the lowest first half since 2018. Economic losses totaled $142 billion, 10% below average.
- Severe convective storms accounted for roughly $26 billion to $28 billion, more than half the insured total
- Eleven events exceeded $1 billion in insured losses, against a ten-year average of 16
- The period extended a run of five consecutive quarters without a single insured loss event above $10 billion
- Aon's parallel accounting put insured losses at $47 billion and economic losses at $111 billion, counting 13 billion-dollar insured events — the defining ones being the Venezuela earthquake sequence ($20–30 billion economic), Portugal's costliest windstorm on record ($4.4 billion economic), and an active U.S. severe convective storm season ($34 billion economic)
Light losses translated directly into buyer-favorable renewals. Marsh chief executive John Doyle reported that June 1 Florida catastrophe renewals brought rate reductions of 15% to 20% as excess supply outweighed a modest increase in demand. Property reinsurance rates fell approximately 16% at the July 1 midyear renewal.
While global insured losses ran nearly 30% below average, Wisconsin recorded 39 tornadoes through mid-July against an annual average of 23, including four EF3 events. A quiet global catastrophe year offers little comfort to a policyholder in Menasha — and agents working storm claims this summer will find the national statistics largely irrelevant to the conversation in front of them.
Forecasters also signaled that the calm may not hold. NOAA confirmed that El Niño conditions have arrived, with at least a 63% chance of reaching very strong intensity by year end — likely the strongest event in 75 years. El Niño historically suppresses Atlantic hurricane activity while shifting severe weather and precipitation patterns across the continental United States.
Life, Annuity, and the 2027 ACA Rate Filings
Life Sales Beat Forecast; Annuities Hold Above $100 Billion
LIMRA released final first-quarter 2026 results for its U.S. Individual Life Insurance Sales Survey in June, reporting that new annualized premium including excess rose 7% year over year to $4.5 billion, with policy count up 5%. Every product line except fixed universal life posted premium gains; fixed UL new premium fell 7% to $219 million. Indexed universal life again led the market, having set records in four of the past five years.
LIMRA's U.S. Individual Annuity Sales Survey, released June 11, put first-quarter 2026 sales at $107.4 billion, up 1% year over year — the tenth consecutive quarter in which annuity sales exceeded $100 billion.
The 2027 Marketplace: Double-Digit Filings on Top of Expired Subsidies
Median Proposed Increase: 14%
The enhanced advance premium tax credits that had reduced marketplace premiums since 2021 expired December 31, 2025 and were not extended during the quarter. Rate filings for the 2027 plan year therefore assume no enhanced subsidies.
KFF published a preliminary analysis of 2027 rate filings in mid-July covering 77 insurers across 16 states and the District of Columbia. The median proposed premium increase was 14%. Most filings sought increases between 10% and 20%, and 20 insurers proposed increases above 20%. The Peterson-KFF Health System Tracker characterized this as the second-highest requested median since 2018.
Georgetown's Center on Health Insurance Reforms found that enhanced subsidy expiration drove 2026 rates 4% to 6% higher on average. CMS finalized its Marketplace Integrity and Affordability rule in June 2026; the 2027 Notice of Benefit and Payment Parameters projects marketplace enrollment reductions of 1.2 million to 2 million.
The combination of expired subsidies and double-digit rate increases produces a specific result at renewal: the premium a subsidized enrollee actually pays is affected twice — once by the gross rate change, and again by the reduced subsidy applied against it. Agents servicing marketplace business should expect renewal conversations to center on net cost rather than headline rates. Enrollees automatically re-enrolled in prior years are most likely to encounter an unexpected figure.
For Wisconsin agents, the relevant dates fall just outside this quarter: OCI posts proposed individual market rates for the coming plan year on or around August 1 and final rates on November 1. Wisconsin was not among the states in the mid-July national analysis. The state's individual market has historically run below national averages, and Wisconsin operates a federal 1332 reinsurance waiver — the Wisconsin Healthcare Stability Plan — that remains authorized through 2028 following 2025 Wisconsin Act 122.
Regulatory & Compliance Updates
NAIC working groups produced several items of direct interest to producers and adjusters during the quarter:
- The Adjuster Licensing (D) Working Group exposed a June 1, 2026 revision to Independent Adjuster Licensing Guideline GL 1224, addressing the definitions of "Staff (Company) Adjuster" and "Designated Home State," with comments due June 19.
- The Market Conduct Examination Guidelines (D) Working Group circulated a Cybersecurity Event Response Coordination Framework dated May 14 and extended the comment deadline from June 22 to July 24. The same group adopted a revised Chapter 21B on pet insurance examinations on May 20.
- The Market Conduct Annual Statement Blanks (D) Working Group approved the Long-Term Care MCAS Blank and its accompanying data call and definitions on May 21.
- The revised NAIC Uniform Licensing Application went live April 10, 2026, consolidating producer and adjuster applications and adding a citizenship question to individual renewals along with a FINRA CRD number field.
- The NAIC Summer National Meeting was scheduled for Columbus, Ohio, August 11–14, 2026, with the Producer Licensing (D) Task Force meeting August 12.
Odd Claims Corner: The Officers Who Wrote Their Own Police Reports
Each quarter we feature unusual insurance claims to remind ourselves that in this industry, truth is often stranger than fiction.
Insurance fraud usually unravels because a document does not hold up. It is rarer for the document to be an official police report — and rarer still for the officer who wrote it to be part of the scheme.
In July 2026, a federal judge in Maryland sentenced a former Anne Arundel County police officer to three years of probation, the first five months on home detention, and ordered him to pay $38,670 in restitution to USAA. He was one of several officers charged in a conspiracy that ran from August 2018 to February 2020 with a straightforward objective: get insurers to pay off the remaining financing on vehicles their owners no longer wanted.
The mechanics were audacious. In August 2018, he and a fellow officer staged the theft of his own Chevrolet Tahoe, stripped it, and drove it into the woods off a state highway. He filed the police report himself, then filed the claim. USAA paid $38,670.
The Jaguar was better. In January 2020, a co-conspirator parked his Jaguar XKR behind a shopping center in the town where a fellow officer served as police chief. Prosecutors said the owner paid the chief $350 to arrange for the car to be towed and vandalized into a total loss. A fourth officer filed the fictitious report. Liberty Mutual paid the lienholder $17,585.
Not every attempt worked. When the group staged the theft of an Infiniti sedan — moving it to an apartment parking garage and swapping its plates for tags registered to another vehicle — GEICO denied the claim as fraudulent.
The coverage lesson is one every adjuster already knows and every agent should be able to explain to a client: a police report documents a claim, it does not prove a loss. Underwriters and claims professionals treat a report as one input among several precisely because the document can be wrong, mistaken, or — as here — manufactured. What started the unraveling was not a police supervisor noticing anything amiss. It was an insurer's fraud referral.
Key Dates for Wisconsin Professionals
- On or around August 1, 2026: OCI posts proposed 2027 individual health insurance market rates (final rates November 1)
- Mid-August 2026: WCRB workers' compensation rate change effective October 1, 2026 expected — an eleventh consecutive decrease would extend a notable streak
- August 11–14, 2026: NAIC Summer National Meeting, Columbus, Ohio (Producer Licensing (D) Task Force, August 12)
- August 12, 2026: Wisconsin Group Insurance Board meeting
- September 24 & 29, 2026: ETF employer kickoff meetings for 2027 open enrollment
- October 5–30, 2026: State and local group health open enrollment (employer application processing closes November 2)
- November 1, 2026: OCI posts final 2027 individual market rates
- January 1, 2027: Group Insurance Board changes take effect — 50-visit combined PT/OT/speech limit, GLP-1 coverage for weight loss, and the 5.0%/8.5% premium increases
- Ongoing: Fox Valley tornado claims and restoration activity, now governed by 2025 Wisconsin Act 230 on post-loss assignment of benefits
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