Liability Insurance Market Trends: A Midyear Update

The general and excess liability insurance market is showing signs of improvement during midyear renewals. Increased competition among insurers is leading to more moderate rate hikes for many commercial buyers, although high claims continue to influence market dynamics. Bob Greenebaum, executive vice president at CRC Group, noted that while rates continue to rise, the extent of these increases has diminished. He described the current market as softening rather than soft.

For buyers with robust loss histories, primary general liability renewals generally saw low- to mid-single-digit rate increases. Meanwhile, umbrella and excess liability programs experienced increases in the single-to-low double-digit range. Matthew Hannon, U.S. national casualty practice leader at Aon's New York office, highlighted an increasingly competitive market. Insurers are aggressively pursuing attractive business opportunities, focusing on individual risk factors rather than industry class, leading to the emergence of "micro markets."

Despite heightened competition, elevated casualty losses continue to challenge the market. Donna Nadeau, head of large commercial at Axa XL, pointed out the difficulty in keeping pace with rising loss costs driven by increasing court awards and settlements. Excess casualty renewals experienced low-double-digit rate increases in the first half of the year, with primary casualty rates climbing in the mid-single digits. The construction sector remains particularly challenging, with excess casualty rates exceeding the broader portfolio.

Evan Hessel, casualty practice leader at Arthur J. Gallagher & Co., remarked that while actuarial loss trends remain high, competitive pressures are containing pricing increases. Abundant capacity has contributed to the competitive landscape, with growth in managing general agent operations and expansion of broker facilities. Marsh Risk's introduction of a new $30 million lead umbrella casualty facility underlines continued advancements in the excess liability sector.

The casualty market also feels the indirect effects of decreasing property insurance prices. Bob Greenebaum emphasized the growing need for casualty lines to contribute more to overall premium growth. Although insurers maintain underwriting discipline, obtaining capacity has become easier compared with the previous year, aided by increased insurer investments and the rise of managing general agents and fronting companies.

In the excess liability space, CRC's placements averaged a 6% rate increase in June, yet challenges persist for high-hazard sectors like transportation, healthcare, and habitational real estate. According to Hessel, "lead umbrellas" for these high-loss risk areas are particularly challenging to place within the insurance market. Legislative efforts are under watch, with brokers and insurers noting potential impacts on liability trends, especially following the third-party litigation funding ban in North Carolina.

Underwriting remains focused on emerging liability exposures, without widespread enforcement of significant new policy exclusions. Artificial intelligence-related liability exclusions are available, but not commonly required for renewals. Participants do not foresee general liability pricing experiencing broad decreases similar to property insurance. Nadeau stressed the importance of maintaining underwriting discipline due to the long-tail nature of casualty claims, which demands diligent cost and exposure management.