Casualty Costs Rise as Catastrophe Pressure Eases for Insurers
A split is emerging in US insurance loss trends, with specialty and casualty lines deteriorating even as property catastrophe pressures ease.
The insurance industry is navigating a sharp divergence in loss trends, with the easing of property catastrophe pressure failing to offset a troubling rise in casualty and specialty line costs. Across major underwriters and brokers, the first half of 2026 reveals a market where improved property conditions are being overshadowed by deteriorating loss ratios in professional and transactional risk lines, forcing companies to seek rate increases just to keep pace with claims inflation.
CNA Financial (CNA) exemplifies this split. While its Specialty segment recorded no catastrophe losses in the first half of 2026, its underlying combined ratio worsened to 96.6% from 93.7% a year earlier. The deterioration was driven by loss cost trends exceeding rate for certain lines, pushing the segment's underlying loss ratio to 62.8% from 60.1%. The pressure was acute in professional errors & omissions, where the company recorded $45 million of unfavorable net prior year loss reserve development in the first quarter of 2026.
Old Republic International (ORI) faced similar headwinds in its Specialty Insurance segment, where the combined ratio worsened to 94.8% in the first quarter of 2026 from 89.8% a year earlier. Elevated loss costs required premium rate increases. Its results were also marred by unfavorable prior year reserve development from its transactional risk business, a line it exited in the fourth quarter of 2024 after generating $19.4 million in net premiums earned that year.
The easing of property catastrophe pressure is creating a different kind of challenge for the distribution side of the market. Insurance capacity for property risks increased beginning in the second half of 2024, leading to declining property premium rates through the first half of 2026. This softening has created opportunities for retailers to place property coverage directly, potentially pressuring wholesale brokerage volumes.
The commercial auto line remains a persistent source of loss inflation. CNA's Commercial segment underlying loss ratio increased due to elevated loss cost trends in this area, compounded by a shift in mix of business. This pressure has been building for years; the segment's catastrophe losses had already risen to $318 million in 2024 from $207 million in 2023. For insurers, the path forward requires underwriting discipline in casualty lines to offset the competitive pressures now emerging in a softening property market.