US middle-market businesses are facing a tough start to 2026, dealing with ongoing inflation, unstable supply chains, and growing talent shortages. These challenges come as insurance costs shift unevenly, with property insurance rates easing while casualty insurance costs keep rising.
Matt Stadler, president of Marsh McLennan Agency, describes the current situation as a “perfect storm” for middle-market companies. He explains that these businesses are dealing with tighter capital, more complicated risks, and a less forgiving insurance market. Companies are faced with a tough choice: whether to save money after years of price increases or invest in long-term risk management.
Middle-market firms have been hit harder than larger companies, Stadler says. Unlike big corporations, many don’t have in-house teams to manage risks every day. Rising costs for goods, tough labor markets, and growing risks have all taken their toll. Recent events, like the government shutdown, have added even more financial pressure on some businesses, especially those relying on government loans or services.
Still, middle-market companies have shown resilience. Their ability to adapt fast, make quick decisions, and find new paths has helped them keep performing better than expected during uncertain times.
Despite their strengths, these businesses face several critical risks in 2026. They often don’t fully use alternative risk strategies like captives or parametric solutions. Cyber insurance is often too generic, leaving companies open to modern threats. And the number of mid-sized casualty claims is growing, making careful risk management more important than ever.
Insurance markets today are moving in different directions. Property insurance costs are coming down a bit, but casualty insurance is increasing because of social inflation, larger jury awards, and more claims in the $1 million to $20 million range. Stadler warns that companies need to look at all types of risk together, including employee health and benefits, which are also becoming more expensive as the talent market tightens.
For insurance brokers working with middle-market clients, Stadler suggests focusing on year-round strategies instead of just short-term renewals. Brokers should offer detailed data analysis and help clients share this information clearly with underwriters. This approach helps companies get better insurance deals. He also advises reviewing the total cost of risk across all areas, not just one part of the business.
Overall, middle-market businesses face a challenging but manageable year ahead. By using data wisely, planning ahead, and addressing all areas of risk together, they can stay flexible and keep moving forward despite the continuing uncertainty.