Property rates are declining at a pace not seen in years, casualty remains stubbornly costly, and broker stocks have taken a hit from fears about AI disruption that analysts say are mostly misplaced. TD Cowen’s P&C insurance preview, published ahead of third-quarter earnings season, lays out a market that is bifurcating along lines that have direct consequences for how brokers advise clients and manage their own businesses.
The firm’s top picks heading into earnings are Aon, Arthur J. Gallagher & Co., and Brown & Brown, all brokers rather than carriers.
Commercial property pricing has been falling for eight consecutive quarters by the Marsh composite measure, with global property rates down 12% in the second quarter of 2026, according to the Marsh Insurance Market Index data reproduced in TD Cowen’s report. In the excess and surplus segment, where property accounts tend toward larger and more cat-exposed risks, declines of 25% to 35% are being reported. That softening is mechanical. Global reinsurance capital reached a record $800 billion at the midpoint of 2026, based on Aon estimates cited in the report, with a significant influx of alternative capital compressing property-catastrophe pricing.
Casualty is not following the same direction. Global casualty rates rose 2% in Q2, though US casualty held firmer at 7%, and pockets of the market, including commercial auto, umbrella, and excess liability, continue to see hardening pressure from nuclear verdicts and social inflation. Savings on property at renewal can be absorbed by casualty increases, as first-half P&C underwriting results showed, leaving some commercial clients no better off on total premium spend despite the headline rate declines.
That dynamic is also what gives brokers traction even in a soft market. TD Cowen expects the broker group to deliver mid-single-digit organic revenue growth in 3Q26 on average, consistent with guidance across the sector, supported by exposure growth and high client retention. The prior quarter’s results back this up. Most major brokers posted organic revenue growth of 4% to 7% in Q2 despite the pricing headwinds.
Meta launched Muse, a personal AI agent capable of comparing insurance policies and switching coverage on a user’s behalf, on September 8, 2026, and within two weeks the broader insurance sector had sold off sharply, with Allstate falling 5.5% on September 22 alone as investors priced in disintermediation risk. TD Cowen is explicit in its dismissal of that fear, at least for commercial lines. The complexity of commercial risks, the value of broker advisory relationships, and the regulatory environment all present structural barriers to AI-led disintermediation at scale.
BofA Global Research estimated in March 2026 that more than $15 billion in US independent agency commissions skew toward low-complexity business and carry some disintermediation risk, but also concluded that large commercial risks are not at risk, as the complexity and advisory value involved cannot be replaced by a digital agent.
The more consequential AI story, by TD Cowen’s read, is internal. WTW’s Propel initiative targets a 30% operating margin by 2028, with AI cited as a driver of the efficiency gains needed to reach it. AJG expects roughly 400 basis points of net AI-driven margin improvement over three to five years. And AI infrastructure itself is becoming a placement opportunity. Swiss Re Institute estimates AI data centers could generate approximately $91 billion in cumulative commercial P&C premiums through 2030, spanning property, engineering, liability, and surety lines. Those are businesses that flow through brokers.
Behind the headline underwriting results, TD Cowen flags a deteriorating picture on casualty reserve adequacy that has not yet fully surfaced in earnings. Reserve deterioration has appeared at Lloyd’s in 2025, at CNA Financial in the first quarter of 2026, and at AIG in US excess casualty in the second quarter. The firm expects more pressure ahead on recent accident years. An additional offset is fading: workers’ compensation favorable reserve development has historically cushioned general liability reserve charges, but years of workers’ comp rate declines make that buffer less available going forward.
A reserve cycle that worsens is a cycle that eventually reprices. For now, the trajectory adds uncertainty to carrier relationships in casualty lines where brokers are already managing clients through persistent rate increases.
The casualty reserve cycle is not yet resolved, and the pattern of charges accumulating across carriers over consecutive quarters is precisely what tends to steepen as it matures. For brokers placing casualty-heavy accounts, the trajectory reinforces the case for careful carrier selection, not just on price, but on the reserve adequacy of whoever is underwriting the risk.
