Welcome to the latest episode of The Connected Podcast, where we delve into the most pressing news and events in the insurance ecosystem. This week, our discussion pivots around the evolving investment landscape for U.S. insurers as we approach 2026, with insights from the Conning Insurance Investment Risk Survey. Despite a turbulent macroeconomic climate characterized by high inflation, liquidity risks, and anticipated low Federal Reserve interest rates, the outlook remains optimistic. Insurers are eyeing growth opportunities through private markets, high-quality fixed income, and infrastructure investments. The survey, which involved 201 decision-makers from U.S. property and casualty (P&C) and life insurance companies, suggests that inflation is expected to rise moderately, with the 10-year Treasury yield staying below 3.5%. The Federal Open Market Committee's actions will be crucial in strategy shaping.

In the P&C sector, the year 2025 was marked by successful rate increases and investment income; however, AM Best warns of a potentially challenging 2026. With rates plateauing and economic factors such as rising claims costs due to increased material prices, there may be financial pressures ahead. The industry's combined ratio and loss ratio are anticipated to rise, indicative of emerging challenges.

In contrast, Hippo Holdings Inc. serves as a beacon of success with stellar financial performance in 2025, reporting substantial increases in both gross and net written premiums. Transitioning from a net loss to a net income, Hippo has demonstrated improvements in its net loss and combined ratios through strategic initiatives such as expanding its homeowners business. CEO Rick McCathron expresses confidence in Hippo's growth trajectory, aiming for considerable gains in gross written premiums and net income by 2028, indicating a promising future within the insurance industry.

We also spotlight the remarkable performance of Hiscox Re in 2025, featuring a pre-tax profit increase to $286.7 million, a 7% rise from the previous year, and an improved combined ratio of 67.4%. Despite a 5% rate decline due to competition, the reinsurance business saw a 6% growth in written premiums to over $1 billion, buoyed by net growth and expanded third-party capital support, especially in pro-rata and specialty lines.

The Sentry 2026 C-Suite Stress Index Survey reveals a dichotomy among business leaders, with prevailing optimism about business growth but increased stress reported by 60% of respondents. Legal challenges affect 93% of businesses, and 69% of leaders are concerned about closures due to large verdicts. Key risks for 2026 include supply chain issues, economic pressures, and cyber threats, prompting cautious payroll strategies.

On the digital front, Cake & Arrow’s report examines friction in insurance design, identifying role, offering, and mission friction as major barriers to seamless digital experiences. These obstacles arise from ambiguous user roles, disjointed product offerings, and conflicting internal priorities, complicating user experiences. CEO Josh Levine advocates for alignment with user workflows to avert workarounds and inefficiencies.

In legislative and industry news, the Risk and Insurance Management Society (RIMS) is focusing on third-party litigation funding (TPLF) in 2026, which allows external investors to fund lawsuits in exchange for a share of the settlement. RIMS is pushing for increased transparency and restrictions on foreign investments in U.S. civil litigation to protect businesses from unwarranted legal costs.

ReSource Pro has launched a new Partnership Program to enhance collaboration across technology and insurance secto