Escalating loss trends remain a challenge for liability insurers
Conditions in the liability insurance market generally remain predictable for most buyers. In the first quarter of 2025, average general liability and auto liability rates rose 4.2% and 10.4%, respectively, according to data from the Council of Insurance Agents & Brokers (CIAB). (See Figure 18.)2 Median lead umbrella price per million rose 9.6% in the first quarter, according to Lockton data, while median excess casualty price per million rose 10.8%. (See Figure 19.)
Social inflation remains the preeminent challenge facing liability insurers and buyers today, resulting in accelerated loss rates and higher premiums. Whereas insurers could historically rely on loss experience to estimate reserves and price coverage, past data is no longer a reliable indicator of future potential losses.
In first-quarter earnings announcements, underwriters highlighted their ongoing focus on risk selection. While liability carriers remain willing to deploy capacity, they are adjusting attachment points, tightening terms and conditions, and managing limits cautiously. Adverse reserve development, meanwhile, remains a significant challenge, prompting insurers to alter pricing models and revisit their reserve strategies.
The recent passage of tort reform in Georgia marks a significant win for insurers and businesses aiming to curb litigation in a state that has become increasingly troubling. The new legislation, along with similar reforms enacted in Florida in 2023, is a welcome sign that states may be waking up to the impact of social inflation on businesses and consumers. Nevertheless, many other “judicial hellholes” remain, and it is unclear whether other states will pass their own reforms.
Insurers, meanwhile, are struggling to evaluate, underwrite, and price several emerging and evolving risks, including autonomous vehicles, artificial intelligence, nanotechnologies, 3D printing, and advanced robotics. Other ongoing concerns include PFAS, asbestos, and assault and battery claims, including for sexual assault and molestation.
Complicating matters is an evolving regulatory environment under the Trump administration, whose more hands-off approach — exemplified by budget and staff cuts and less enforcement — could prompt more stringent regulation at the state level. Such uncertainty leaves insurers unsure about how future losses may unfold and buyers unclear about how best to present their risk to underwriters.
Carriers are increasingly seeking to limit multiyear losses under occurrence-based policies. The recent announcement by Chubb, Zurich, and National Indemnity of a new excess casualty facility centered on claims-made and reported coverage could be a sign that the industry is beginning to steer buyers away from occurrence policies, for which coverage can be difficult to price and reserve.
1Note: 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.
2Charts in this report using Lockton P&C Edge Benchmarking data show median rate changes year over year. Median figures, however, are not available for Figure 18, which uses data from CIAB.
