Rising Liability Insurance Rates: Trends and Market Insights

Liability insurance rates saw noticeable increases towards the year's end, with variations influenced by policyholders' loss records and program structures. Many industry participants chose higher retentions and elevated excess program attachment points to manage premium escalations effectively. Despite underwriter market exits, new capacity emerged in significant regions such as the U.S., Bermuda, and London, indicating a dynamic shift in the insurance landscape. Renewal outcomes varied significantly across sectors, with transportation risks facing considerable challenges. Alexandra Littlejohn, Executive Vice President at Alliant, highlighted that excess liability rates for auto fleets rose by approximately 10% on average, with larger long-haul fleets experiencing even higher increases. This trend underlines the pervasive impact of AI-driven prior authorization delays within the sector. Matthew Stitham, Chief Underwriting Officer at Axa XL, observed that overall rates did not decrease in the fourth quarter. In habitational and real estate sectors, increases were particularly significant due to escalating claim costs, litigation, and social inflation. These areas are under intense scrutiny in terms of regulatory compliance requirements. Umbrella and excess liability rates experienced considerable hikes, with insurers showing readiness to walk away if necessary rate levels weren’t met. According to Matthew Hannon, Aon's U.S. National Casualty Practice Leader, large accounts generally saw rate increases of 5.5% in general liability and 9% in auto liability. Variations were tied closely to client loss histories and specific program configurations. Adapting to Changing Market Conditions Jessica Cullen from Lockton explained that program structure changes are pushing policyholders to adjust attachment points and explore diverse insurer combinations. Particularly, excess coverage attachment points for auto fleets are rising, reflecting insurers' hesitance to engage below certain thresholds. Hannon indicated a preference for multi-year and alternative structured coverages, offering potential premium savings for clients with minimal losses. This trend is reshaping risk management strategies within the industry. Although there's compression in capacity deployment, adequate market capacity remains, hinging on factors like attachment points and industry specifics. New capacity through managing general agents (MGUs) has proven beneficial, though typically limited in scale. Littlejohn emphasized MGUs’ robust capacity, thanks to their focused underwriting strategies. Market Shifts and Future Outlook As the industry evolves, market participant composition stayed relatively stable in 2025, with some capacity providers transitioning roles. Everest’s exit from global retail insurance and Liberty Mutual's strategic adjustments in its U.S. excess liability segment were notable shifts. The industry also anticipates further changes, such as Sompo's acquisition of Aspen Insurance and the introduction of Mosaic’s new excess liability unit in Bermuda with $10 million in capacity. Despite the broad availability of claims-made coverage options from major insurers, occurrence-based policies remain prevalent. Insurers are incorporating more exclusions, including those for AI-related exposures and PFAS, due to their complex regulatory compliance requirements. Ms. Cullen predicts the next year will test the sustainability of the current rating environment, with expectations for potential stabilization in less hazardous classes. However, excess liability sectors are likely to face ongoing pressures due to evolving underwriting practices.