Ten Most Important Events in the US Insurance Market in May 2026
Progressive Overtakes State Farm as Largest Auto Insurer
S&P Global Market Intelligence confirmed that Progressive surpassed State Farm as the largest U.S. private passenger auto insurer for the 12 months ended March 31, 2026, with approximately $70.2 billion in direct written premiums versus State Farm’s $68.7 billion. This marks the first time since World War II that State Farm has not held the top position, ending an 84-year reign dating to 1942.
Progressive’s trailing-12-month personal vehicle net premiums grew 11.6%, while State Farm’s declined 0.1%, reflecting divergent strategic trajectories. In Q1 2026 alone, Progressive’s private auto direct premiums written reached $18.1 billion, exceeding State Farm’s $17.1 billion for the first time in a single quarter. The shift underscores Progressive’s successful leverage of technological evolution and direct-to-consumer distribution, gaining 210 basis points of market share on State Farm in 2025.
P&C Industry Posts Record Q1 2026 Underwriting Profit
The U.S. property and casualty insurance industry recorded an unprecedented net underwriting gain of $22.10 billion in Q1 2026, according to S&P Global Market Intelligence. The combined ratio before policyholder dividends came in at 89.5%—more than a full percentage point better than any first-quarter result in at least 25 years—marking the seventh consecutive quarter with a sub-100% combined ratio.
Homeowners multiperil led the charge, with its direct incurred loss ratio falling 58.1 percentage points year-over-year to 44.3% in Q1 2026, reversing the spike to 102.3% in Q1 2025 driven by Los Angeles wildfires. Private passenger auto continued favorable conditions with a direct incurred loss ratio of 60.4%, improved 0.6 percentage points year-over-year and roughly 15.4 points below early 2023 levels. The eight largest U.S. private auto writers each generated underwriting profits exceeding $1 billion, with State Farm posting a $7.07 billion swing to a gain of $1.98 billion versus a $5.09 billion loss in the year-earlier period.
However, casualty lines remained a weak spot: other liability lines posted a direct incurred loss ratio of 65.8%—the highest such result for a first quarter in 24 years—while commercial auto liability deteriorated 3.2 percentage points to 71.1%.
AIG Acquires Everest’s Colombian Insurance Operations
American International Group (AIG) announced a definitive agreement to acquire Everest Group’s Colombian insurance subsidiary in May 2026, expanding its Latin American footprint amid consolidation trends in emerging markets. The deal reflects ongoing M&A activity as carriers seek geographic diversification and scale in high-growth regions, despite broader U.S. market maturation.
PwC’s 2026 midyear outlook highlighted carrier consolidation, distribution rollups, and life & annuity platform investments as dominant M&A themes, with megadeals reshaping competitive dynamics across personal and commercial lines.
Greg Lindberg Sentenced to 12 Years for $2 Billion Insurance Fraud
Greg Lindberg received a 12-year federal prison sentence for orchestrating a $2 billion insurance fraud scheme involving manipulated reserves, affiliated loans, and bribery. The case, one of the largest insurance fraud prosecutions in U.S. history, spotlighted systemic vulnerabilities in reinsurance oversight, affiliated transactions, and regulatory enforcement.
For industry stakeholders, the verdict reinforced the importance of trust, oversight, and policyholder protection mechanisms, particularly in non-admitted and reinsurance markets where transparency gaps persist.
NAIC International Forum Highlights AI, Climate, and Private Credit Oversight
The NAIC 2026 International Insurance Forum convened May 7–8 in Washington, D.C., drawing a record 300 registrants from 20 jurisdictions. NAIC President and Virginia Insurance Commissioner Scott White emphasized three strategic priorities: leadership, modernization, and resilience in insurance regulation.
Key initiatives included:
- AI governance: Piloting AI evaluation tools to help regulators assess insurers’ use of algorithms, with 29 jurisdictions now regulating insurer AI use as of Q2 2026.
- Climate resilience: Developing guidance on catastrophe modeling through the Catastrophe Risk Management Center of Excellence, alongside climate disclosures and stress testing.
- Private credit oversight: State insurance regulators met with U.S. Treasury Secretary Scott Bessent on May 7 to share perspectives on insurers’ increased exposure to private credit and solvency framework evolution.
The NAIC also announced Jeff Johnston as its new CEO, effective June 1, 2026.
Medicare Advantage 2027 Rule Finalized with Consumer Protection Rollbacks
CMS finalized policies for the 2027 Medicare Advantage final rule in early May 2026, enhancing some consumer protections while rolling back changes intended to protect beneficiaries. The rule addresses payment issues, star ratings system modifications, and prescription drug coverage changes under the Medicare Part D redesign.
Payments from the government to MA plans are expected to increase on average by 5.06% from 2025 to 2026, with the effective growth rate at 9.04%—higher than the 5.93% estimate in the CY 2026 Advance Notice. CMS completed the three-year phase-in of improvements to the MA risk adjustment model, applying 100% of the adjustment for MA-related medical education costs in CY 2026.
The changes have drawn scrutiny for potential implications on Medicare beneficiaries, particularly regarding prior authorization practices and network adequacy standards.
Cyber Insurance Market Reaches $19.6 Billion Amid AI Exclusions and Ransomware Evolution
The global cyber insurance market is on track for $19.6 billion in premiums in 2026, yet coverage is becoming harder to secure and more likely to fail at critical moments. At-Bay’s 2026 InsurSec Report documents an all-time high average claim severity of $221,000, driven by AI-powered attacks and automated ransomware.
AM Best’s June 2026 report noted that combined overall cyber insurance premiums increased slightly to $7.5 billion in 2025, with the industry-wide cyber loss ratio ticking upward by 4.3 percentage points to 53.0%—the first time since the COVID-era ransomware spike that the loss ratio exceeded 50%. Surplus lines carriers now account for almost two-thirds of all cyber insurance by premium, with an incurred loss ratio of 55.9% versus 50.2% for admitted carriers.
Key trends include:
- AI exclusions: Carriers increasingly exclude AI-driven attacks absent contractual indemnities.
- Third-party claims growth: Class action lawsuits with fewer claimants per suit are rising as legal firms collect breach data directly.
- SME coverage gap: Small to medium enterprises remain largely untapped, creating aggregation risk for insurers.
P/C Underlying Growth Expected to Slow 3.7% in H1 2026
The U.S. property/casualty insurance industry is expected to see underlying growth decrease 3.7% for the first half of 2026 amid economic uncertainty, according to a report from the Insurance Information Institute (Triple-I) and Milliman. The industry grew 1.6% in 2025, but replacement costs are projected to grow 2.1% for H1 2026 and exceed U.S. inflation by 2028.
The industry’s net combined ratio for 2025 was the lowest in more than 10 years, with general liability and commercial auto the only major lines above 100. Personal auto saw its net combined ratio improve 3.5 points to 91.8, while homeowners finished at 88.1—the lowest in over a decade—as insurers priced for increased catastrophe activity (benefiting from no landfalling hurricanes in 2025).
Recovery isn’t expected until 2027–2028, contingent on Federal Reserve interest rate decisions and unemployment trends.
State Regulatory Activity Surges: Adjuster Licensing, AI Oversight, and Wildfire Disclosure
May 2026 saw unusually heavy state-level regulatory activity, with adjuster licensing and continuing education requirements expanding in Connecticut and South Carolina. Connecticut granted its Insurance Commissioner authority to establish adjuster CE mandates, while South Carolina enacted comprehensive reforms including fingerprint requirements and adjusted fees.
AI oversight in health insurance gained momentum, with Alabama, Georgia, and Virginia enacting laws requiring strict human oversight for adverse claims decisions or automated clinical denials. Texas mandated written explanations for all declined, canceled, or non-renewed P&C policies, while Virginia addressed coverage refusals tied to asphalt shingle roof age.
Wildfire-related disclosure obligations and FAIR Plan notification requirements expanded across multiple states, reflecting intensifying regulatory scrutiny of climate-driven loss exposure and market-of-last-resort participation.
Allstate Reports $289 Million in May Catastrophe Losses
Allstate disclosed $289 million in catastrophe losses for May 2026 ($228 million after-tax), with combined April–May cat losses totaling $1.16 billion ($915 million after-tax). Despite these losses, the insurer maintained its position as a leading industry player, trading at a low P/E ratio of 4.9.
As of May 31, Allstate’s in-force policies reached 38.8 million across all categories, up 0.3% month-over-month and 2.4% year-over-year. Auto policies grew to 25.9 million (+2.7% YoY), homeowners to 7.8 million (+2.6% YoY), and other personal lines to 4.9 million (+0.9% YoY). The company announced it would shift to quarterly policy count reporting going forward.
Read more:
Insurance Market January 2026 – Insurance January 2026
Insurance Market February 2026 – Insurance February 2026
Insurance Market March 2026 – Insurance March 2026
Insurance Market April 2026 – Insurance April 2026