The news: Large insurance carriers reported 2025 full-year earnings in January and February. Key themes from earnings calls: catastrophe losses, climate risk, the impact of inflation on claims and pricing, and the emerging AI arms race in underwriting.

• Catastrophe losses are an expected cost of doing business—but climate change is making them harder to model. Climate change alters the frequency and severity of disasters, making existing models less reliable and exposing carriers to legal liability. Insurers are adjusting their underwriting, but few near-term fixes exist for their catastrophe exposure. Progressive’s concentration in hurricane and hail-exposed states leaves its property business especially vulnerable. Chubb is using an internal climate science group to adapt.
• Inflation is causing higher claims for some insurers. Progressive said that inflation has shown up in auto policy costs as medical bills and repair costs have risen. Coverage for injury claims is driving up costs further.

Implications for insurers: One analyst, Michel Léonard, warned that economic and geopolitical uncertainty, combined with rising replacement costs, could weigh on carrier performance in 2026. Fitch expects the P&C market will overall continue to soften this year amid competition and pricing pressures. The question for carriers is no longer whether catastrophe losses will worsen—it’s how much and how fast.

Carriers’ options are limited to what they can control: costs, underwriting decisions, and risk exposure. Technology that lowers fixed costs and improves risk modeling—from AI-powered claims automation to data-driven pricing—is their clearest lever. But upgrading modeling and underwriting systems is a yearslong process. Carriers that haven’t started will fall further behind as catastrophe frequency and inflation volatility continue.