With Capital Aplenty and Power of AI, Commercial Lines Promises Opportunity: Willis

The commercial insurance industry is entering a period of stability and opportunity made possible by an abundance of capital and the power of artificial intelligence (AI), according to a new report from global broker Willis.

This promising stage comes after years of volatility stemming from the pandemic, inflationary pressures, and geopolitical unrest, according to the Insurance Marketplace Realities 2026 report from Willis.

Insurers, with backing from industry surplus capital exceeding $1 trillion and reinsurance capacity over $725 billion, are pursuing growth across multiple product lines, the report finds.

This market is good news for buyers, as it creates opportunities for expanding coverage, enhancing structural positions and reexamining portfolios. “This capital abundance is not just stabilizing — it’s energizing. It allows carriers and brokers alike to pursue bold, client-focused solutions,” the report asserts.

According to Willis, nearly every commercial line of insurance — except for excess casualty — is in soft market territory. For example, property insurance renewal rates declined 8% in the second quarter and 5.5% in the first quarter and despite significant catastrophe losses, the market remains competitive. Cyber insurance direct written premiums declined 2.3% in 2024. Workers’ compensation also remains favorable, supported by a $16 billion reserve surplus.

“Buyers are navigating a very different market than just a few years ago,” said Jon Drummond, global head of Carrier Management at Willis. “We’re seeing meaningful opportunities for companies to enhance their programs and drive better returns on their insurance spend, even as certain lines remain under pressure.”

Capital abundance is only part of the story. Artificial intelligence is “actively reshaping” the industry. “From the boardroom to the underwriting desk, AI-enabled tools are unlocking deeper insights, driving more informed decision making and expanding the very definition of insurability,” the authors contend.

Willis sees the emergence of large data centers in particular as fostering new insurance products “tailored to match the scale and complexity of an AI-powered digital world.”

Caution

Despite the improved market landscape, Willis urges caution, noting that that global insured catastrophe losses have topped $100 billion annually for five consecutive years along with. Also, Willis warns, cyber events, financial market shocks, or escalating climate disasters could “quickly reverse current gains and reintroduce volatility into the commercial insurance market.”

Here are selected excerpts from the Insurance Marketplace Realities 2026 report from Willis:

Property The property insurance market is experiencing a softening trend. Despite significant catastrophe losses, the market remains competitive.

Casualty The casualty insurance market is currently experiencing significant firming, but in some instances, increased flexibility and the development of new strategies is evident.

Directors and Officers Liability The D&O market remains competitive, with the abundance of capacity moderated by continued pressures toward rate stabilization.

Employment Practices Liability/Wage and Hour As more guidance emerges from the current administration, we anticipate an increase in claims and adjustments may be made in more risky jurisdictions and industries.

Errors and Omissions While some primary insurers are still trying to impose claims inflation increase of 2% to 3%, primary policy rate increases for large law firms have mostly leveled off with reductions possible.

Fidelity/Crime The fidelity and crime market remains stable, even in an ever-evolving threat landscape. Rate pressure may be present on programs with meaningful coverage enhancements and/or loss experience.

Fiduciary Liability Although some traditional fiduciary carriers continue to be wary, there have emerged enough carriers with increased appetites to create improved and stabilized market conditions.

Financial Institutions – FINEX The financial lines market is currently experiencing a mixed state, with both softening and hardening trends depending on the segment.

Specialty Lines

Architects & Engineers A&E professional liability carriers face increasing claims severity (85%) driven by social inflation, economic uncertainty, and emerging risks like AI and climate change.

Construction The construction insurance market faces challenges across multiple lines, with general liability and auto under pressure, while workers’ compensation remains stable.

Energy The Q1 2025 property energy insurance market saw slowed rate reductions due to large losses. Property rates remain competitive, while liability classes with heavy auto exposure face challenges.

Environmental Environmental insurance market trends for 2026: Rate predictions, emerging exposures, and new product developments in pollution liability and environmental coverage.

Healthcare Professional Liability The top 50 malpractice awards averaged $56 million in 2024, reflecting a 14% increase from 2023 and a 75% increase from 2022.

Life Sciences Still experiencing rate stability, largely due to the ongoing influx of new capacity and no signs of a slowdown in marketplace competition.

Marine Cargo Marine cargo and stock throughput insurance markets remain soft, offering insureds better rates, enhanced coverage, and protection across the supply chain.

Product Recall With tariff-driven cost inflation and multi-hundred-million-dollar loss activity, recall programs must be stress-tested for adequacy.

Senior Living Cost of litigation, social inflation and large verdicts continue to be a concern for the senior living industry.

Topics InsurTech Data Driven Commercial Lines Artificial Intelligence Business Insurance