This Week’s Strategic Signals for P&C Carrier and Insurtech Executives
Overall: Severe convective storms have become the biggest insured loss engine, turning cat risk into year-round attritional bleed instead of a seasonal hurricane event.
Personal Lines: Pennsylvania’s blocked rate filings show that rate adequacy is now gated by regulatory permission, not underwriting math.
Commercial: ISO’s generative AI exclusions will quietly narrow CGL in 2026, pushing more “normal business” liability into cyber, E&O, and coverage disputes.
Cyber: PDVSA’s shutdown is a blunt reminder that when OT and core systems go dark, companies lose cashflow, safety control, and throughput all at once.
Each section also includes ‘other signals on our radar.’ Write back and let us know if you’d like to see more detail on any of those.
In Force is a weekly intelligence brief for P&C Insurance executives, delivering high-impact developments shaping the P&C space: what happened, why it matters, and what to do about it. It is designed for carrier and insurtech strategy, product management, marketing, sales, broker/agent relations, and innovation teams. Each issue distills complex shifts into decision-grade insight.
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1. Overall
Severe Convective Storms Surpass Tropical Cyclones as Costliest Insured Peril of 21st Century
What Happened
Aon plc released its 2026 Climate and Catastrophe Insight report on January 20, 2026, reporting that severe convective storms (SCS) have surpassed tropical cyclones as the costliest insured peril of the 21st century. In 2025, global natural disaster economic losses totaled $260 billion, about 23% below the 21st century average and the lowest since 2015, while insured losses reached $127 billion, remaining elevated versus the long term average and marking the sixth consecutive year above $100 billion. Aon identified 30 insured loss events exceeding $1 billion in 2025, far above the historical average of 17, underscoring the accumulation of frequent, mid sized catastrophes. The report highlighted that SCS accounted for $61 billion in insured losses globally in 2025, the third highest annual SCS total on record. This divergence between economic and insured losses reinforces how high frequency, high severity secondary perils, particularly U.S. concentrated SCS outbreaks, can drive substantial insurance claims even in years when overall catastrophe losses are below the long term economic average.
Why It Matters
Severe convective storms are now the industry’s biggest insured loss engine, and they break the old playbook. Hurricanes are seasonal, trackable, and easier to “manage” through modeling, reinsurance, and underwriting posture. SCS is none of that. It is frequent, geographically messy, and capable of quietly stacking losses through repeated billion dollar events.
Implications for P&C Executives
Cat volatility is now a drip, not a cliff. Expect more years where nothing “big” happens but results still get hit by stacked SCS losses that erode margins quarter by quarter.
Your reinsurance may be mis-shaped for the actual loss pattern. Traditional cat towers optimized for peak hurricane severity can underperform when attritional SCS losses keep chewing through retentions and reinstatements.
Hail and wind are becoming a pricing and product credibility problem. When repair inflation and roof claim severity keep climbing, carriers either tighten terms fast or watch rate inadequacy show up in the combined ratio.
Geography is a false comfort. Texas and the Plains are obvious, but the real risk is broader dispersion and year-round exposure, which makes concentration management harder and “safe diversification” less reliable.
Other Overall Signals on our Radar:
Reinsurance Renewals Turn Buyer Friendly as Cat Rates Fall 15 to 20%January 2026 reinsurance renewals show a clear shift into a buyer’s market for property catastrophe, with multiple sources reporting meaningful price softening versus mid 2025. RLI achieved 15 to 20% rate reductions on its catastrophe program and cut its cat limit by $150 million, citing lower exposure and continued soft conditions. Fitch also observed rate reductions up to 5% across U.S. and European cat exposed portfolios, with loss free U.S. and European property accounts seeing declines as high as 20%. Abundant capacity, supported by more than $700 billion in global reinsurance capital, is keeping competitive pressure elevated.
2. Personal Lines (Home, Auto, etc.)
Pennsylvania Insurance Department Blocks $227.9 Million in Proposed P&C Rate Increases
What Happened
The Pennsylvania Insurance Department (PID) announced on January 14, 2026, that it blocked $227.9 million in annual proposed property and casualty insurance premium increases from taking effect in 2025. PID Commissioner Michael Humphreys emphasized the labor intensive nature of this oversight, noting that the department reviews thousands of complex filings annually, many spanning thousands of pages with variables ranging from past claims history to consumer education levels. The breakdown of blocked increases reveals critical patterns: title insurance represented the largest rejection category at $103.6 million, followed by personal auto at $91 million, homeowners and dwelling fire at $16 million, personal umbrella at $11.2 million, and other P&C lines at $6.1 million. PID conducted this analysis through continuous year round rate review processes, working directly with insurers to request revisions, additional data submissions, and reduced increase requests before approval consideration.
Why It Matters
Pennsylvania’s blocked rate volume is a reminder that rate adequacy is not just an actuarial problem. It is a regulatory permission problem. Even with loss trends pushing higher, departments can and will force carriers to negotiate down filings, delay approvals, or reject increases outright, especially in lines that attract consumer attention or political heat.
Implications for P&C Executives
Rate is becoming the least reliable lever in personal lines. When regulators block or haircut filings, carriers are forced into slower, messier fixes like underwriting tightening and product design changes.
Title insurance is a political line of fire, not just a pricing exercise. Expect heavier pushback and longer timelines, which raises the value of expense control and distribution discipline more than “better rate work.”
Auto profitability will keep diverging by state, not by carrier skill. Pennsylvania-style scrutiny makes national rollouts fragile, with growth and retention driven by approval calendars and negotiation outcomes.
Market strategy starts looking like regulatory arbitrage. The real advantage shifts to carriers that can pivot quickly with deductibles, limits, eligibility, and channel mix when pure rate gets blocked.
Other Personal Lines Signals on our Radar:
Homeowners Results Stabilize as Carriers Push More Risk to PolicyholdersHomeowners insurance performance remained broadly stable in 2025 despite the January Los Angeles wildfires, with industry data through Q3 indicating a net combined ratio of 99.6, roughly in line with 2024. Triple I and Milliman attributed the resilience to prior rate increases, tighter underwriting, and policy term tightening, helped by a quiet Atlantic hurricane season with zero U.S. landfalls for the first time since 2015.
3. Commercial
ISO Deploys Generative AI Exclusions for Commercial Liability
What Happened
The Insurance Services Office (ISO), an advisory organization providing standard policy forms and rating information to insurers, introduced three new optional endorsements effective January 2026 that allow carriers to exclude generative artificial intelligence exposures from commercial general liability and products/completed operations coverage, described by Verisk commentary as a way to generally exclude this emerging exposure. The endorsements are: 1) CG 40 47, which excludes Coverage A and Coverage B for bodily injury, property damage, or personal and advertising injury arising out of generative artificial intelligence, 2) CG 40 48, which excludes Coverage B only, and 3) CG 35 08, which excludes bodily injury or property damage under Products/Completed Operations arising out of generative artificial intelligence. The ISO forms define generative artificial intelligence broadly as a machine based learning system or model trained on data with the ability to create content or responses, including but not limited to text, images, audio, video, or code.
Some surplus lines carriers introduced AI exclusions ahead of ISO’s January 2026 forms, including Berkley Insurance Company’s absolute AI exclusion that bars coverage for any actual or alleged use, deployment, or development of artificial intelligence by any person or entity, spanning AI generated content, failure to detect AI content, inadequate AI related policies or training, breach of duty regarding AI, products incorporating AI, and representations made by chatbots or virtual customer service agents. In parallel, specialty insurers are developing AI specific coverage products, such as Testudo’s claims made policy focused on generative AI errors and AI driven IP infringement and defamation exposures, and industry observers expect a growing share of AI liability to migrate from general liability toward cyber insurance, Technology Errors and Omissions coverage, and standalone AI policies as these exclusions proliferate.
Why It Matters
ISO’s new optional generative AI exclusions make AI liability a coverage-grant question, not a claims-handling problem, and they will push a meaningful slice of “ordinary” commercial risk out of CGL and into E&O, cyber, or standalone AI products as 2026 renewals hit. With definitions written broadly and some carriers already going further with near-absolute exclusions, the practical outcome is more gray-area disputes, more client surprise at claim time, and more pressure on carriers and brokers to inventory AI usage, clarify what is and is not covered, and decide whether they want to be early movers
Implications for P&C Executives
CGL is about to get narrower in a way clients won’t notice until there’s a claim. If AI touches advertising, customer interactions, or product decisions, the exclusion can become the carrier’s off-ramp.
Distribution risk will spike because “AI use” is now normal business behavior. Brokers will need sharper intake and client education, or expect E&O exposure when a denial traces back to an exclusion nobody explained well.
This will re-route premium into cyber and Tech E&O whether you want it or not. Carriers that don’t have a clear play in those lines risk losing relevance with AI-heavy insureds even if the rest of the account is attractive.
Ambiguity is the real loss driver early on. Broad definitions plus aggressive exclusions create fertile ground for coverage disputes, which means higher frictional costs, slower settlements, and reputational damage in contested claims.
4. Cyber
Venezuelan Oil Industry Is Running on WhatsApp After Cyberattack
What Happened
A mid-December cyberattack knocked PDVSA’s core systems offline, forcing Venezuela’s state oil company to run operations with phone calls, handwritten reports, and consumer-grade messaging apps. Bloomberg reports SCADA systems were impacted and SAP remains down, disrupting internal email, payments, accounting, and production data access.
Why It Matters
This is a clean case study in how cyber events turn into operational and financial paralysis when core IT and operational technology aren’t resilient. It also highlights a risk US operators can’t dismiss as “foreign dysfunction” the failure mode is universal: lose SCADA visibility plus enterprise systems, and you lose control of cash, safety, and throughput at the same time.
Implications for P&C Executives
SCADA exposure is still being underwritten like “IT risk.” When OT goes dark, you get safety exposure, interruption, and loss amplification in a single hit.
Manual operations are a loss multiplier, not a fallback plan. Workarounds (WhatsApp, handwritten logs) increase error rates, slow response, and create new compliance and evidence problems when claims land.
Cyber BI is only as good as your ability to prove downtime. If production and payment systems are down, insureds struggle to document loss magnitude, which drags out adjustment and drives disputes.
Critical infrastructure targets are shifting from “data theft” to “operational choke points.” The real risk is business stoppage and cascading vendor impact, not just breached records.
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