Competition among auto carriers will increase in 2026

After several unpredictable years of rate spikes and underwriting pressure, auto loss ratios are beginning to moderate and stabilize within certain customer segments. This shift marks the beginning of a more favorable auto insurance landscape for both consumers and carriers, as less volatility gives carriers more flexibility to compete. 

Moderating auto loss ratios are currently driven by several factors. For one, we're seeing a decline in claim severity. Despite some persistent inflation and supply chain challenges, the cost of parts and labor needed for auto repairs has declined. At the same time, the number of cars on the road equipped with advanced safety features – such as automatic emergency braking, lane departure warnings, etc. – has helped reduce the frequency and severity of auto accidents. Another key factor has been the notable reduction in catastrophic weather events in 2025, which eased the pain of expensive weather-related auto losses experienced in previous years. 

Stronger underwriting discipline over the last two years, involving tighter coverage terms and stricter premium-setting, is also beginning to pay off, restoring profitability for carriers. According to S&P Global Market Intelligence (GMI), 2025 will have seen the strongest overall property/casualty insurance underwriting results in 18 years, driven by favorable private passenger auto outcomes. 

As profitability improves, auto carriers are reentering markets they previously scaled back from or exited altogether. Rate filings by auto carriers requesting premium increases are moderating or flattening, as insurers gain greater confidence in their loss outlook. Collectively, these developments point to a healthier auto insurance market, where insurers are feeling more secure in the balance between premiums collected and claims paid out. As a result of their improved financial positions, carriers are allocating more resources to customer growth. As S&P GMI notes, an uptick in competitive dynamics in the private auto sector is increasingly evident, "with rate decreases matching rate increases and increased advertising spending."

Opportunities for carriers and consumers

While competition among auto carriers will increase in 2026, moderating auto loss ratios do not always translate into lower premiums for consumers. VIU by HUB's 2026 Outlook Report and Rate Guide suggests that auto premium increases will generally fall at or under 10% in the coming year; a less dramatic increase than in previous years, but an increase nonetheless. 

But more predictability with auto loss costs does mean insurers are more comfortable pricing risk and competing for customers. Consumers stand to benefit from a wider range of custom policies and competitive offers; auto carriers will be more incentivized to offer targeted discounts, telematics incentives, loyalty rewards, and selective rate decreases for lower-risk drivers. 

In this environment of heightened auto carrier competition alongside modest premium growth, auto owners benefit from shopping around to compare coverage options. With careful policy evaluation and the help of a trusted broker, consumers can begin to offset premium increases by leveraging competitive offers across a broader field of insurers. 

One strategy worth considering in the era of moderating auto loss ratios is bundling auto and home policies. While auto loss ratios have improved, homeowners' insurance loss ratios have been less favorable, especially in high-risk climate regions. By pairing a more stable auto line with a higher-risk home line, consumers might save considerably. 

Some insurers offer additional benefits for bundling, such as reduced deductibles, extended coverage options or loyalty rewards which can add value beyond cost savings. So, bundles can help carriers offer more coordinated coverage, better pricing and cost-saving benefits, securing longer-term relationships in the process.

However, bundling is not always the right choice. In some cases, separate policies save consumers money. For example, if one line is experiencing significant rate pressure or if a different carrier offers stronger value for a single line, bundling may not be worthwhile. Sometimes an insurer is offering a bundle that pairs policies with an affiliate company, which reduces the ease and convenience of working with one company. And if bundling requires settling for subpar coverage, it's not worth any potential savings. 

Ultimately, the return of competitive pressure in the auto insurance market underscores a point we make at VIU often: informed comparison – shopping around and weighing coverage options – is vitally important for today's consumers.  By shopping strategically and seeking expert guidance consumers can navigate a stabilizing but still evolving market with confidence.