Abundant capacity offset by unyielding severity

Pricing increases are moderating; although conditions vary based on line and industry, some buyers are even seeing flat primary renewals:

• GL buyers are generally renewing flat to up 5%, with high-quality risks achieving flat renewals, while those with heavy U.S. exposure or adverse loss histories continue to see single-digit rate increases.
• Commercial auto buyers are generally renewing up 8% to 15%, making auto the most persistently challenged line in the casualty sector. Despite years of sustained rate increases, combined ratios remain elevated as rising repair costs, increased litigation activity, and nuclear verdict exposure continue to drive losses.
• Umbrella and excess buyers are generally renewing up 5% to 10%. The era of hard market corrections is behind us — for now — but carriers continue to push for rate on top of exposure changes as they seek to stay ahead of social inflation trends.

It’s important to note that the above estimates do not tell the full story. Carriers continue to push attachment points higher, particularly over auto, as they seek to limit exposure to the layers where nuclear verdicts are most likely to penetrate. Building and designing large casualty towers17 is possible, but achieving optimal results may take buyers more time and require lengthier negotiations with individual carriers.

Capacity is abundant, but insurers are deploying capital in a more disciplined and targeted fashion. Global reinsurance capital reached record highs entering 2026, driven by strong investment returns and a benign hurricane season. The market is also seeing an increase in nontraditional capital from hedge funds and pension funds; the majority of this capital, however, is flowing into property and short-tail lines where the loss environment is more predictable.

New capacity is also entering the casualty market via sidecar structures and Bermuda-based insurers looking to diversify away from property volatility. Most carriers, however, remain wary of U.S. liability long-tail development. Buyers should not confuse the availability of capacity with a willingness by carriers to absorb adverse development at current rates.

Underwriters are increasingly focused on correlated loss accumulation18 across a single account. A large auto verdict, a GL bodily injury claim, and an umbrella exhaustion can all arise from the same event or the same underlying exposure, and carriers managing portfolio aggregation are pricing that correlation into how they deploy capacity. For buyers, this means that how a program is structured matters as much as what it costs.

Insurers are nevertheless competing aggressively for the right new business as exposure growth and retention rates on existing books have stabilized. Carriers are particularly eager to write “clean” GL risks to offset volatility in their auto and excess books. Exceptions remain, however: Transportation and logistics risks, along with healthcare professional liability and habitational real estate, continue to face far more difficult conditions, reflecting loss experience and litigation exposure.

Liability claims severity continues to outpace frequency, and the drivers are structural rather than cyclical. Medical inflation has ticked up since late 2025, increasing the cost of third-party bodily injury claims just as economic inflation was expected to ease. Social inflation remains an ongoing challenge, with nuclear and thermonuclear verdicts a particular concern in auto and product liability.

TPLF has matured, encouraging plaintiffs and their attorneys to pursue novel theories of liability, lengthening claims durations, enabling plaintiffs to reject early settlements, and leveling the playing field against insurers. Carriers writing liability risks must also account for loss development that may not fully emerge for a decade or more, under legal and social conditions that are difficult to model with any degree of confidence.