Understanding the Insurance Landscape: A Softer Market, A Smarter Strategy

When the Los Angeles wildfires kicked off 2025 with approximately $40 billion in insurable losses, most of the insurance industry braced for continued firming in the market, including higher pricing and more limited contract terms and conditions. Yet, as we close out 2025, the insurance market has steadily softened, offering a welcomed shift for policyholders. Further, indications for the January 1, 2026, reinsurance renewal cycle suggest continued capacity and stable pricing. According to Hannover Re, reinsurers have returned to more balanced operations, earning steady returns and building surplus reserves after several years of volatility.

The ‘softening’ across most lines of business is working to increase carrier competition and, in turn, create opportunities for clients to evaluate their risk programs to make sure the coverages are best positioned to respond in the event of a claim. For individuals and companies that take a strategic approach to risk management, this environment presents an opportunity to strengthen protection, optimize coverage terms, and potentially reduce costs heading into 2026.

Here’s what’s changing, why it matters, and what to consider before the new year.