Lessons From 2025 Loss Trends & What They Mean for 2026 Planning

As the insurance and legal industries reflect on 2025, one theme stands out clearly: loss trends continue to evolve in ways that challenge long-standing assumptions. While no single year can define the future, the events and patterns observed over the past year offer useful signals that organizations can consider as they plan for 2026.

Rather than attempting to forecast outcomes with certainty, examining what consistently emerged in 2025 can help carriers, claims professionals, and legal partners think more strategically about what may lie ahead.

Loss Severity Continued to Outpace Frequency

One of the most widely discussed developments in 2025 was the ongoing gap between claim frequency and claim severity. While some lines saw relatively stable or even declining claim counts, the cost associated with individual losses continued to rise.

Contributing factors included higher repair and replacement costs, increased medical expenses, and longer claim lifecycles. Even routine claims often required greater financial and operational resources than in prior years. This trend reinforced the idea that managing severity — not just reducing frequency — remains a critical focus area.

Looking toward 2026, this suggests that early intervention, proactive claim handling, and clear documentation may play an increasingly important role in overall loss performance.

Litigation and Social Inflation Remained Key Influences

Litigation trends continued to shape loss outcomes in 2025. Many organizations observed that disputes escalated more quickly and resolved later in the claim process, often at higher cost. Jury attitudes, venue considerations, and evolving plaintiff strategies all contributed to uncertainty around ultimate exposure.

While these dynamics are not new, 2025 reinforced how consistently they affect outcomes across jurisdictions and claim types. For claims and legal teams, this highlighted the value of early legal assessment and closer coordination between adjusters, defense counsel, and other stakeholders.

As planning for 2026 begins, organizations may benefit from reviewing how and when legal resources are engaged, particularly in complex or high-exposure matters.

Climate-Related Losses Became a Baseline Consideration

Weather-related losses continued to draw attention in 2025, not only because of catastrophic events, but because of their frequency and geographic spread. Events that may once have been considered unusual occurred with greater regularity, sometimes in regions historically viewed as lower risk.

Beyond direct property damage, these events often led to secondary impacts such as business interruption, supply chain disruptions, and liability disputes. The cumulative effect made it clear that climate-related volatility is increasingly part of the baseline risk environment.

For 2026, this may encourage organizations to assume greater variability in loss activity and to build flexibility into underwriting, reserving, and response planning.

Reinsurance Pressures Influenced Strategic Decisions

Reinsurance considerations continued to influence primary market behavior throughout 2025. Capacity constraints, pricing pressures, and increased scrutiny of loss histories affected how organizations approached risk retention and coverage structures.

These pressures underscored the importance of defensible claims handling and transparent reporting. Loss trends were not just operational concerns, but factors that directly influenced financial strategy and long-term planning.

As organizations look ahead, aligning claims practices with broader risk and reinsurance strategies may remain a key area of focus.

Technology Provided Support — With Limits

Technology and data analytics played a growing role in claims and legal workflows during 2025. Automation, predictive tools, and enhanced reporting capabilities helped identify patterns and improve efficiency in many cases.

At the same time, the year highlighted the limits of technology when data quality, human judgment, or communication broke down. Tools proved most effective when they supported experienced professionals rather than attempting to replace them.

For 2026, this suggests that thoughtful integration — rather than rapid adoption alone — may yield the greatest value.

Using 2025 as a Planning Reference, Not a Prediction

While no one can say with certainty what 2026 will bring, the consistent themes observed in 2025 offer useful context. Rising severity, litigation complexity, climate-related volatility, and financial pressures all point to the need for adaptability and collaboration.

Organizations that treat 2025 as a reference point — rather than an outlier or a definitive forecast — may be better positioned to respond thoughtfully to whatever changes emerge next. In that sense, the most important lesson may be less about predicting the future and more about preparing for continued uncertainty with clarity, flexibility, and informed perspective.