Insurance has become one of the most visible and persistent indicators of inflation in household budgets. Rates for health, auto, life, and property insurance have been soaring, all of which preceded the recent shock to energy prices.
The latest consumer price index data reflected the impact of higher energy prices, showing year-over-year inflation of 12.5%. That compounds the challenge of consumers trying to budget for those higher prices at a time when their fixed costs, such as insurance, are already elevated.
And while consumers tend to point the finger at corporate greed, the situation is more nuanced. Insurance companies are in the business of managing risk, and right now, nearly every cost involved in assessing that risk is rising.
Inflation is part of it. But so too are increasingly severe climate events, reinsurance hikes, and higher litigation costs. Higher energy prices add in supply chain risks and elevated catastrophe risks in energy-exposed regions, which makes the problem worse.
Unfortunately, as a result, insurance companies are repricing premiums faster than policy renewals can absorb costs. That pricing power is painful for the insured, but for investors, it could be a tailwind. Here are three insurance stocks at different stages of the pricing cycle, which gives them different outlooks as inflation hedges.
Travelers Leans Into Pricing Power Despite Rising Catastrophe Risk
Travelers Companies (NYSE: TRV) has been one of the best-performing insurance stocks in the financials sector. It’s up about 20% over the past 12 months, but that growth has decelerated in 2026, with TRV up around 3%.
The company posted a double beat when it reported Q4 2025 earnings on Jan. 21. However, Travelers also lowered its Catastrophe Excess of Loss, or CAT XOL, attachment point to $3 billion from $4 billion. The concern is that this is the company’s reinsurance contract that protects it against catastrophe losses exceeding a certain amount.
While Travelers is taking what could be seen as a prudent move by lowering its CAT XOL, the company acknowledges a belief that it is expecting a rougher catastrophe environment. And while Travelers has said that it won't present a problem for reinsurance, it appears investors aren’t convinced.
TRV is trading just below its consensus one-year price target of $308, but analysts are generally bullish, which may be due to expectations of 35% earnings growth in the next 12 months. Plus, Travelers arguably has the best dividend of the three companies on this list. The current yield is about 1.5%, equating to an annual payout of $4.40 per share. After increasing its payout for 21 consecutive years, the company is eyeing membership in the Dividend Aristocrats club.
Chubb’s Premium Base Positions It for Margin Expansion
Chubb (NYSE: CB) presents a similar case to investors as Travelers. The stock is up about 15% over the last 12 months and about 5% in 2026. Shares of CB are also within about 6% of their consensus one-year price target of $345.33.
The company delivered strong results in Q4 2025, with net income of $3.21 billion, nearly 25% higher year over year. However, like Travelers, Chubb did cite some catastrophe risk that could impact the balance sheet in 2026.
For now, analysts remain bullish with several recent price targets for CB coming in well above the consensus target. That could be an acknowledgment of Chubb’s focus on specialized commercial and high-net-worth personal lines that command higher margins than standard insurance. It's likely that these policies haven't fully priced inflation into their renewals yet, which could translate into earnings acceleration above the 16% target in the next 12 months.
Progressive’s Pullback May Be Creating a Value Opportunity
Progressive (NYSE: PGR) is a laggard among insurance stocks. PGR is down more than 10% in 2026 and more than 25% over the last 12 months. That’s due, in part, to the company being a victim of its own success. Many consumers remember 2021 and 2022 when inflation on used car prices, repair parts, and labor hit auto insurance companies simultaneously.
Progressive was in the best position to manage that surge because it had already been raising premiums. Therefore, instead of turning away customers, they actively marketed to new customers and won the lion’s share of the business.
But since 2022, Progressive has lost some of that business as companies—including Travelers and Chubb—have repriced their books to enable them to be more aggressive on pricing. To combat this, Progressive has shown slower premium growth , and the market has priced in continued deceleration.
However, shares of PGR are now trading at around 10x earnings, which is a 64% discount to its three-year average and a slight discount to the sector average of around 12x. That's a significant amount of derisking, and it suggests Progressive may offer better value than its peers.
Analysts have a consensus one-year price target of $237 for PGR, suggesting nearly 20% potential upside. Those targets could move higher if Progressive delivers earnings growth higher than the 4.9% being forecast in the next 12 months.
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The article "3 Insurance Stocks That Can Act as a New Inflation Hedge " first appeared on MarketBeat.
