2026 Insurance Outlook: What Consumers Can Expect

By Brian O’Connell

Estimated reading time: 12 minutes

Topic Details in this 2026 Insurance Report

Table of contents

• The Customer Outlook: Consumer Behavior Is Changing: Shoppers Are Smarter, More Active, and More Digital
  • Home Insurance: Climate Losses, Reinsurance, and Market Retreats
  • Auto Insurance: Moderation, But No Major Relief
  • Health Insurance: All Eyes on ACA Subsidies
• AI Is Reshaping Insurance; Speeding Service, Changing Pricing, But Raising New Risks
  • Climate & Natural Disasters: The Biggest Long-Term Driver of Insurance Change
  • Parametric Insurance Is Rising, Speeding Up Payments in the Process
• Government & Regulation: What 2026 Policy Decisions Mean for Consumers
• Tips for Consumers: How to Save Money and Reduce Insurance Angst in 2026
• The Takeaway: The Long-Term Outlook and Short-Term Implications

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The US insurance sector is in acceleration mode heading into 2026, with total market size expected to exceed $3 trillion by the end of next year and an 8.5% compound annual growth rate from 2023 to 2027.

The U.S. insurance landscape is shifting faster than at any time in the past decade.

Premiums across home, auto, health, and even life insurance continue to trend upward. Artificial intelligence is reshaping underwriting and claims. Climate-driven disasters are forcing insurers to redraw risk maps and, in some areas, pull back entirely. And a handful of federal policy decisions, particularly involving the Affordable Care Act (ACA), could determine whether millions of Americans pay hundreds or even thousands more per year for coverage.

Yet experts say the picture isn’t all doom and gloom. While affordability pressures remain intense, consumers also have more tools, more transparency, and more ways than ever to take control of their insurance costs.

“Affordability will dominate the consumer experience in 2026,” said Kami Adams, founder of Creative Legacy Group and a licensed benefits advisor in more than 30 states. “But consumers who stay informed, shop early, and take practical steps like mitigating home risks or reviewing subsidies will be best positioned to manage rising costs.”

Here’s what Americans can expect from their 2026 insurance experience and what they can do about potential logjams.

The Customer Outlook: Consumer Behavior Is Changing: Shoppers Are Smarter, More Active, and More Digital

The insurance industry is showing significant resilience against rising tides like continued stubborn inflation, a more stringent regulatory outlook, higher catastrophe losses, ongoing climate change risks, and major customer experience angst, thanks mainly to rising policy prices in key areas like home, life, health, and auto insurance.

That’s leading to an insurance market fissure, splitting customers into two disparate groups and making policy management all the more challenging.

A case in point. According to AI-driven predictive marketing intelligence company Sooth, there’ll be a divide between “cost management” and “stress management” insurance shoppers throughout 2026.

“Affordability pressure creates two distinct mindsets,” said Ian Baer, founder and CEO at Sooth, “The first group—younger, renter-heavy—treats insurance like a streaming subscription: something to pause, downgrade, or rotate based on price. The second group, homeowners in climate-vulnerable areas and families facing healthcare costs, will increase coverage despite complaining about premiums.”

The “save money” messaging attracts low-value switchers, while the “peace of mind” messaging will appeal to customers who stick and spend, Baer added.

Insurers should also expect more frequent comparison shopping, which is already being hyper-scaled on the digital markets front.

“People are shopping around more often, raising deductibles, trimming optional coverages,” said Gregg Barrett, CEO of Waterstreet Company in Bigfork, Montana

Home Insurance: Climate Losses, Reinsurance, and Market Retreats

Climate awareness is also rising among consumers, especially asmore homeowners now take insurers’ mitigation recommendations seriously. Fire-proof roofing, water-leak sensors, defensible space, and hurricane shutters are in demand, as these upgrades can materially affect premiums and insurability.

In the climate realm,the property insurance market remains the most volatile. Repeated climate-driven disasters, including wildfires in the West, hurricanes in the Southeast, and severe convective storms across the rest of the country, continue to push claim severity higher.

“Home and auto premiums have climbed sharply as insurers cope with bigger weather losses, pricier repairs, and more expensive reinsurance,” Barrett said. “That pressure is most intense in coastal and wildfire-exposed states like California and Florida, where some companies are cutting back or exiting altogether.”

To insurers, the retreat is all too real. Several national carriers have limited new business in high-risk ZIP codes, while smaller regional carriers have failed outright.

To stabilize markets, several states are attempting to modernize rate regulation and strengthen FAIR Plans, state-run insurers of last resort. That impact should be delayed. “Those fixes take time to show up in consumer bills,” Barrett noted.

Other industry experts say that the market will increasingly reward households that take physical steps to reduce risk.

“Coverage of climate-related perils is evolving, particularly in locations devastated by fires and on the coast,” said Mario Serralta, a Florida-based insurance attorney, who said he sees this trend daily. “Insurers are pushing proactive mitigation; roofing upgrades, shutters, defensible space,” he stated. “Long-term access in high-risk areas will depend on it.”

Auto Insurance: Moderation, But No Major Relief

Auto premiums spiked from 2022 to 2024 for several reasons, notably inflation, supply-chain delays, and higher repair costs driven by tech-integrated vehicles. The good news? Those pressures have eased, but not to the degree consumers hoped.

“Inflation is moderating, but claims severity still drives higher rates in some areas,” Adams said.

Other market veterans say some cost issues are temporary, while others are more or less permanent.

Health Insurance: All Eyes on ACA Subsidies

The affordability wildcard for 2026 is health insurance, and specifically whether Congress extends enhanced ACA premium tax credits.

“If enhanced ACA subsidies weaken, patients won’t just get higher bills,” said Dr. William Soliman, CEO of the Accreditation Council for Medical Affairs. “There will be a chain reaction that causes more denials, tougher prior authorizations, and more delays in care.”

Without subsidy extensions, millions could see double-digit premium increases in 2026. With extensions, premiums remain more stable for most marketplace enrollees. Life insurance remains the most stable category, with pricing that is moderate and predictable, tied to age and health.

AI Is Reshaping Insurance; Speeding Service, Changing Pricing, But Raising New Risks

If 2025 was the year insurers broadly integrated AI, 2026 is the year consumers begin to feel those changes firsthand.

“Artificial intelligence is quietly rewiring consumer insurance from the inside out,” Barrett said. “Insurers are using AI to sift through vast amounts of data in underwriting, speed claims handling, and power 24/7 chatbots. When done well, it means faster service and more accurate pricing.”

What can consumers expect to see? Experts cite these AI-powered customer experience upgrades.

• Shorter wait times for claim approvals
• More customized pricing
• Better fraud detection
• Lower administrative costs that could eventually reduce premiums

Many customers have already seen the benefits on the ground. “AI has made the communication process more efficient,” Serralta noted. “For instance, it can identify missing paperwork early, preventing delays.”

In the healthcare realm, AI’s impact could be transformative, though any pricing improvements remain on the horizon.

“In 2026, we’re going to start seeing drug development times shrink dramatically,” Soliman said. “What takes 8–10 years today may fall to 12–24 months. AI will cut clinical trial recruitment time by 50%.”

The biggest AI insurance risks lie in bias and opacity.

“Models trained on biased or incomplete data may misprice risk or disadvantage certain groups,” Adams said. “Consumers should ask questions and request human review if an AI-generated outcome seems incorrect.”

Other market mavens agree, noting that the public sector needs to rein in AI, and the sooner, the better. “Poorly designed algorithms can unintentionally discriminate or make mistakes that are hard to challenge,” Barrett stated. “So, regulators are now demanding explainable AI, clearer governance, and strong human oversight.”

Digital-footprint-based pricing is also emerging, adding another technology layer to the US insurance market. 

“Insurers are using AI to price risk with terrifying precision,” said Matthew Bertram, a longtime AI strategist, warns consumers. “Your digital footprint, like gig work patterns, extreme-sports posts, even health-related behaviors, increasingly affects pricing.”

Insurers will have to keep pace as digital platforms and AI tools become standard for industry customers, especially younger households weaned on the internet and mobile apps. In this environment, consumers increasingly expect certain services to be fundamental and non-negotiable, such as instant quotes, chatbot assistance, usage-based pricing, and personalized policy recommendations.

Even so, they still want human support for complex issues.

“The companies that blend digital convenience with a human touch are seeing the most loyalty,” Barrett said.

Climate & Natural Disasters: The Biggest Long-Term Driver of Insurance Change

Climate-driven losses remain the defining challenge of the property insurance market, with insurers rewriting coverage risk maps in real time.

“Climate change has turned property insurance into a frontline issue,” Barrett said. That’s changed the coverage model, as insurers now use advanced catastrophe modeling, real-time satellite imagery, and AI-enhanced risk scoring to decide where they can profitably operate.

That rising trend should lead to these consumer-impacted outcomes.

• Harder underwriting in wildfire, flood, and coastal regions
• Higher deductibles
• Stricter home-inspection requirements
• Carriers exiting entire ZIP codes

Parametric Insurance Is Rising, Speeding Up Payments in the Process

To speed up payouts after disasters, insurers are experimenting with parametric policies, which automatically pay out when a measurable event occurs (for example, when a hurricane reaches Category 3 or wildfire smoke reaches a set threshold). As parametric insurance gains momentum, consumers may welcome an insurance experience with no adjusters or documentation.

Government & Regulation: What 2026 Policy Decisions Mean for Consumers

U.S. Consumers can expect health policy, especially ACA subsidies, to be a deciding factor in household decisions about health insurance value and cost.

The central policy question for 2026 is whether Congress extends enhanced ACA premium subsidies. Experts said they expect the ACA itself to remain intact, but the cost-shaping mechanics may shift.

“Most proposals maintain the ACA framework but adjust subsidy levels or expand HSA flexibility,” Adams said. “Consumers should run subsidy estimates early, as small income changes may drastically affect eligibility.”

On the homeowner front, state-level action on homeowners’ insurance will continue to accelerate.

Exhibit A is insurance reforms being implemented by US states, with Florida’s lawsuit-reform measures already lowering rates, according to Stacey Giulianti, chief legal officer at Windward Risk Managers in Tallahassee, Florida. Additionally, California is exploring modernized rate approvals and updates to catastrophe modeling, while coastal states are expanding public backstops like Citizens Property Insurance Corp.

Those scenarios should support consumer efforts to choose the best policy based on value, and not just cost.

“Don’t just seek cheaper premiums, shop carriers for the broadest possible coverage and the most robust limits,” Giulianti advises, adding that consumers should prioritize coverage adequacy over premium chasing. “If a loss occurs, you’ll want full rebuild protection, not a bargain policy that comes up short.”

Tips for Consumers: How to Save Money and Reduce Insurance Angst in 2026

Every expert agreed on one theme: Consumers who actively manage their insurance will save the most.

Here are the most actionable steps industry experts cited for 2026.

• Shop every renewal: Don’t assume last year’s plan is still best. Do your homework and see what new features and services insurers are offering in 2026 as well as compare your rates – let IQ help you compare by entering your zip code above.
• Check ACA subsidies: “A small income or household changes can affect eligibility,” Adams said.
• Raise deductibles strategically: Leveraging plan deductible options is doable, “but only if you have a safety fund,” Adams advised.
• Bundle carefully. Make sure to compare bundled versus standalone quotes when making any big insurance ‘combination platters.’
• Mitigate home risks. Protect your home and your pocketbook byinstalling shutters, roof upgrades, sump pumps, defensible space, and ask about discounts.
• Stay organized. “Keep a one-page summary of policies, renewal dates, deductibles, and contacts,” Adams noted. Make sure to include policy numbers, policy renewal dates, insurance deductibles, coverage limits, emergency contacts, and claims history.
  • Bertram also stated that even one annual “documentation audit uncovers 15–20% waste on average.”
• Ask about AI decisions. If your claim is rejected digitally, request human review for denials or unusual premium changes.
• Shop early in high-risk areas. “Note that policies may be limited or sell out quickly,” Adams added.
• Be strategic about your digital footprint. Review digital-driven behavioral tracking habits, like limiting auto miles, not smoking, or going to the gym. In cutting overall household insurance costs, it’s free money if you don’t mind being tracked by an insurance device or software.

“If you’re going to let insurers monitor your behavior for a discount, make sure you’re gaming those metrics,” Bertram said.

• Review your policies regularly. Above all else, work with a trusted financial expert to ensure you’re optimizing your insurance experience for 2026 and not for 2025 anymore.

 “Consumers should be aware of how insurance can easily fall out of alignment with one’s real-life circumstances,” said Chris Heerlein, CEO at REAP Financial, an investment advisory firm. “Insurance policies are set in place and renew automatically with rates increasing in most cases.”

Heerlein said it’s not unusual for an insurance policy to go several years without any changes or reviews. “As accumulating small changes are made within your home and work routine year after year, an insurance policy can easily become out-of-date, very quickly,” he noted. “All it takes is to bring every policy together and examine them as you would check your pantry before a shopping trip.”

Heerlein said he’s observed redundancies and deductibles that no longer match a person’s savings. “After a thorough inventory, many are better positioned to reach out to their agent and request quotes that better fit their current life stage,” he added. “Many clients were able to reduce their overall rate by 70% just by making this adjustment.”

The Takeaway: The Long-Term Outlook and Short-Term Implications

In the shorter term, the insurance landscape in 2026 will be shaped by three major forces: rising costs, accelerating AI adoption, and climate-inflated risks. Consumers cannot control those trends, but they can control how they respond.

“In 2026, rising costs, technology changes, climate risks, and policy decisions will shape insurance,” Adams said. “Consumers who shop smart, stay informed, and take practical steps like reviewing subsidies and mitigating home risks will be best positioned to save money and secure coverage.”

Over the next decade, experts expect two Americas to emerge, with implications for the insurance market, especially home insurance.

• Households that can pay for mitigation (impact-resistant roofs, flood retrofits) and afford higher premiums.

• Households that cannot may eventually have to relocate or rely on government support to cover insurance needs.

As Serralta notes, “Insurance industry developments affect long-term access in high-risk areas and encourage proactive consumer planning.”

If 2025 was a wake-up call for consumers, 2026 will be the year they take more control than ever over their policies, now and for the long haul.