LIABILITY

Underwriting discipline holds amid growing exposures

KEY TAKEAWAYS

Liability rates are still rising modestly, with competition improving mainly for high-quality risks and selective excess layers.

Insurers are tightening capacity, terms, and exclusions and increasing scrutiny of high-risk sectors and emerging exposures.

Outcomes are increasingly risk-specific, with significant differentiation between well-performing and higher-exposure accounts.

Expected rate changes next quarter*

5% to 10% increase

General liability

8% to 12% increase

Auto liability

5% to 15% increase

Lead umbrella

6% to 16% increase

Excess casualty

Liability remains the most challenging aspect of the P&C market, but conditions for many buyers are steadying. In the first quarter, rates rose 2.6% for GL and 5.8% for auto liability, on average, according to data from the Council of Insurance Agents & Brokers (CIAB).** Median lead umbrella price per million rose 8.0%, according to Lockton data, while median excess casualty price per million rose 7.6%.

Rate increases are moderating in some areas, including for auto and higher-hazard liability classes. Even so, buyer relief remains limited. Any favorable pricing movement is generally incremental, not material, and outcomes continue to vary by industry, loss experience, and risk profile. Pricing is not softening meaningfully; carriers are addressing concerns about loss trends through higher attachment points, tighter limit deployment, reduced line sizes, greater use of quota share and layered structures, and more restrictive terms.

The casualty reinsurance market is broadly stable but bifurcated. Growth appetite varies by reinsurer, reflecting past soft market positions. Capacity is rising from third-party capital, while demand is flat to slightly down. Outcomes are increasingly cedant20-specific: Strong performers can expect smooth renewals, while those with adverse development face pressure.

Reinsurers continue to favor top-performing cedants, even at more buyer-friendly terms, while monitoring any easing of underwriting standards. Cedants remain disciplined on limits. Barring major shocks, the reinsurance marketplace is expected to remain stable for the remainder of the year.

Market conditions vary widely by industry. Well-performing, lower-risk sectors benefit from stronger competition and better outcomes. Higher-risk industries or those prone to litigation face greater scrutiny, reduced capacity, and less favorable terms.

Liability risk capital is increasingly fragmented and selectively deployed across MGAs, delegated platforms, and facilities, often backed by alternative capital. MGAs are emerging as credible sources of coverage due to their specialization and flexibility, helping to drive rates down through added capacity and competition. The London and Bermuda marketplaces remain stable, with signs of increased capacity from MGAs.

For insurance buyers, securing the best results requires coordination across all platforms. Risk professionals should work with their insurance brokers to evaluate options and ensure alignment with risk needs.

Carrier discipline in recent years has been driven by uncertainty related to nuclear verdicts, litigation funding, and claims severity. The long-tail nature of occurrence-based liability and several emerging risks are reinforcing underwriting discipline even as buyers resist continued rate increases. The market isn’t just correcting for this — it’s uncertain whether it has corrected enough.

AI is perhaps the most closely watched emerging risk: Insurers are actively monitoring litigation trends and coverage implications across multiple lines. (See Managing risk in a new technology.)

Underwriters are also closely monitoring:

Premises liability

Certain subsegments face tighter capacity and more restrictive terms.

Assault & battery

Coverage is increasingly difficult to secure, especially for hospitality, retail, and some real estate buyers. Insurers are adding more exclusions and sublimiting coverage, forcing buyers to pursue more costly stand-alone placements.22

Sexual misconduct liability

Expanded statutes of limitations and high-profile claims are driving reduced limits, tighter terms, and capacity withdrawals.

Habitational risks

Elevated frequency, aging infrastructure, and litigation trends are pushing more risks into higher-cost excess and surplus lines markets.

Construction defects

Long-tail losses are driving tighter completed operations coverage and stricter subcontractor requirements.

Environmental liability

Expanding exclusions and regulations are increasing cleanup and litigation exposure across a broader set of companies.

Social media litigation

Claims targeting addictive design and algorithmic harm may extend product liability frameworks.

Food & beverage litigation

Suits targeting ultraprocessed ingredients and links to chronic disease are gaining traction.

Underwriting quality has become a key differentiator. Carriers are using data and analytics to assess risk more precisely, and the quality of a submission directly influences pricing, terms, and capacity. Insurers expect buyers to clearly articulate how their risk profiles are evolving, including exposures related to AI, social media-related liabilities, per- and polyfluoroalkyl substances,23 and premises controls.

Organizations that invest in detailed, data-driven submissions supported by loss analysis and risk management documentation consistently achieve better outcomes. Thoughtful carrier selection — with a focus on long-term appetite, financial strength, and claims expertise — remains critical. Visible executive engagement can also signal commitment, strengthen credibility, and reinforce the quality of opportunities.

*Note: Rate ranges presented here reflect expected renewal outcomes — as of the Lockton Market Update publication date — over the next quarter for most insurance buyers. These should not be taken as a guarantee of any specific results during renewal negotiations. Depending on risk profiles, loss histories, account specifics, and other factors, individual buyers may renew their programs outside these ranges.

**Charts in this report using Lockton P&C Edge Benchmarking data show median rate changes year over year. Median figures, however, are not available for general liability and auto liability data sourced from CIAB.

20Cedant: A primary insurer that transfers, or cedes, a portion of risks it has underwritten to a reinsurer in exchange for premium. The reinsurer assumes responsibility for covered losses above the cedant's retention, according to the reinsurance contract. (See glossary.)

21Delegated platform: Insurance platforms in which an insurer gives a third party, such as an MGA, MGU, program administrator, or coverholder, authority to underwrite, bind, issue or administer policies within agreed guidelines. (See glossary.)

22Stand-alone placements: Insurance policies placed separately from a broader program or package, often to address a specific coverage need, exposure, or market requirement. (See glossary.)

23Per- and polyfluoroalkyl substances (PFAS): A group of synthetic chemicals developed for use in several household items, such as nonstick pans and food packaging. Often referred to as "forever chemicals" because of their difficulty in breaking down at the molecular level, PFAS are thought to contribute to a range of harmful health effects when they accumulate in the body over time.