U.S. Commercial Liability Insurance Sees Seventh Year of Premium Increases
Commercial insurance buyers continue to face premium increases in general and excess liability lines amid ongoing market challenges. Despite new capacity entering the U.S. liability insurance sector, rates have risen for the seventh consecutive year, driven primarily by escalating court awards and settlements, especially in commercial auto and habitational real estate sectors. Insurers and brokers report mid-single-digit increases in primary general liability, with umbrella and excess liability rates rising significantly higher, varying by risk hazard and industry type.
The market sees underwriters adopting cautious capacity deployment strategies, which lead to limit reductions in certain sectors. Auto liability remains particularly difficult for excess coverage due to shrinking insurer capacity and mid-layer limit reductions. Additionally, sexual abuse and molestation liability coverage is becoming more restricted, often requiring separate policies or sublimits, especially in sectors like education, hospitality, nonprofit, and habitational real estate.
Policyholders are reacting to affordability pressures by retaining more risk through structured or fronted insurance programs and adjusting limits downward to manage premium costs while meeting contractual obligations. These smaller limits can heighten the frequency and size of claims payouts, complicating loss control for insurers. The rise in claims also motivates buyers to source buffer coverage from excess and surplus lines markets to fill gaps between lead and excess layers.
New market entrants—including Tokio Marine HCC, MSIG USA, and a $100 million claims-made excess liability facility launched by Chubb, Zurich North America, and National Indemnity Co.—have added capacity, albeit mostly in smaller mid- to high-excess layers. The overall market remains vigilant as insurers reassess capacity and underwriting terms in response to loss trends and pricing pressures.
This landscape of escalating liability rates, evolving risk retention strategies, shifting capacity, and underwriting caution underscores ongoing challenges and adjustments within the U.S. commercial liability insurance market. The dynamics influence risk management decisions, coverage structuring, and insurer capacity deployment across multiple industry segments.