David Seider, CCO of The Zebra says the risks for the year ahead are becoming ever clearer and will test the markets.

As we head into 2026, the outlook doesn’t appear quite as blurry as expected. There are clear, decipherable patterns that suggest a competitive landscape for carriers in 2026.

The competition is heating up

The fight to attract and retain policyholders is about to get more intense for carriers in the auto insurance sector. Many insurers have already taken targeted rate reductions in certain regions, encouraging consumers to shop around for the best deal. While these targeted reductions help, I still anticipate persistently high renewal rates as a broader trend. Many families may start to feel financial pressure if economic conditions sour or turn recessionary, increasing the cost of insurance as a percentage of take-home pay. This could lead to higher levels of uninsured motorists and prompt more people to shop carriers in search of lower rates – possibly at every renewal.

Growth in home 

Competition may resurface in the home insurance market after years of retrenchment brought on by elevated claims costs from extreme weather events, inflation, and regulatory challenges. 2025 was a significantly improved loss-ratio year for home underwriters, and now insurance companies must confront the challenge of converting that profitability into momentum. This could mean more options back in the market for homeowners and additional reasons to shop outside the normal windows, such as when refinancing a mortgage or at the time of property purchase. Digital shopping will play a bigger role, empowering customers to more effortlessly compare policies and shop around more often.

The two factors that will matter most in 2026 are competition and claim inflation when it comes to projecting rate pricing for both home and auto coverage. We’ll see increased competition temper rate increases and selective reductions (mostly in auto) to grow market share, even if it means narrowed underwriting margins. But tariffs, spiking labor costs, litigation-linked severity, and general inflation over the coming months may increase the cost of claims, influencing carriers to adjust premiums to remain ahead of loss costs. I anticipate these opposing pressures pushing carriers to make difficult decisions resulting in uneven pricing, meaning consumers will need to shop more strategically than ever before.

M&A outlook

I foresee investment in artificial intelligence surging, specifically in claims-related areas like first-notice-of-loss processes and fraud detection. Established carriers will continue to hire sharp underwriters who find creative approaches to risk, while private equity players should remain active in insurance distribution.

States are tightening the reigns 

State legislation and regulatory trends will continue to make a big impact in 2026. As insurance continues to be regulated at the state level, some states may get more aggressive in permitting or denying rate increases and insurers may need to jump through more hoops to justify increases. For an example of this, look at recent insurance reforms in Florida and Louisiana, which have resulted in premium savings for policyholders. Meanwhile, states like California will continue to grapple with how to deploy regulatory tools to attract private insurers back to the state.

The ultimate balancing act

The coming year will present plenty of obstacles and opportunities for carriers and consumers alike. Carriers will need to balance the competing pressures of inflation and profitability while also taking a tech-forward approach to grow or maintain market share.

State legislation and regulatory trends will continue to make a big impact in 2026. As insurance continues to be regulated at the state level, some states may get more aggressive in permitting or denying rate increases and insurers may need to jump through more hoops to justify increases.