The market is not sending one clean signal right now. Profitability is still strong, competition is inching back, claims costs are staying stubborn, and carriers are starting to talk less about fixing and more about building.
1. Carriers Are Moving From Repair Mode To Growth Mode
Liberty Mutual says 2026 is about shifting from fixing to building after a strong 2025. The carrier reported net income up 55% to $6.8 billion and a combined ratio of 88.4, down from 95.9 in 2024. Management said the next phase is scaling what works, leaning into target segments and distribution, and growing only where returns clear their thresholds. The company also said it is embedding AI into underwriting, claims triage, workflow speed, and service consistency, while keeping pricing, coverage, and claims decisions under human judgment and governance.
Source: Insurance Journal
Why this matters for agencies:
- Strong carriers are no longer just trying to repair results. They are choosing where they want to grow.
- Agency partners that bring clean, profitable business in target segments will get more attention than generalist shops with mixed books.
- AI is being used to improve speed and consistency, which means carriers will increasingly expect cleaner submissions and better operational discipline from agencies too.
2. Claims Cost Pressure Is Looking Structural, Not Temporary
A new Gallagher Bassett study says North American insurers are dealing with a structural shift in claims costs, not a short-cycle blip. The report points to rising claims complexity, social inflation, medical inflation, catastrophe losses, economic volatility, and AI-driven fraud as converging pressures on carriers and MGAs. Among North American respondents, 64% said claims complexity rose over the last 12 months, with general liability, property, and auto feeling the biggest strain.
Source: Insurance Business
Why this matters for agencies:
- Even if rate pressure eases in some lines, the underlying cost base is still moving higher.
- Weak documentation, sloppy submissions, and marginal risks will keep getting priced hard or pushed aside.
- Agencies that help clients improve data quality, loss control, and claim readiness will be more valuable to both carriers and insureds.
3. Insurance M&A Stabilized, But Buyers Got More Strategic
Clyde & Co’s new Insurance Growth Update 2026 says global insurance M&A activity stabilized in 2025 after the sharp drop in 2024. Total deals rose to 211 from 202, but stayed well below the 346 seen in 2023. In the Americas, activity fell from 92 deals in 2024 to 77 in 2025, while the broader trend was toward more selective, strategic acquisitions rather than volume chasing. The report also notes 15 deals of at least $1 billion globally, including seven “mega deals” above $5 billion.
Source: Clyde & Co.
Why this matters for agencies:
- The market for deals is still there, but buyers are acting with more discipline than they did at the peak.
- Clean books, niche relevance, and operational quality matter more than just size or premium volume.
- If you are thinking about selling in the next few years, the agencies that stand out will be the ones that look strategic, not just available.
4. AI May Already Be Changing Hiring Plans
Aon and The Jacobson Group’s Q1 2026 Insurance Labor Market Study found the share of insurers expecting to keep staffing levels flat over the next 12 months hit a 15-year high, while just 7% plan to reduce headcount. Insurance Journal notes one possible driver: companies may be pausing hiring to see how far AI and recent system investments can improve productivity first. At the same time, 43% expect staffing to stay flat, up 10 points from January 2025, and job openings in insurance and finance have fallen sharply from their 2022 peak.
Source: Insurance Journal
Why this matters for agencies:
- The conversation is shifting from “how many people do we need?” to “which work still needs people?”
- Agencies that redesign tasks and workflows will have an advantage over agencies that just keep adding headcount to the same broken process.
- This is an operational signal as much as a labor one: productivity tools are starting to affect staffing strategy in a real way.