Challenging US casualty conditions demand a multipronged framework for success, say Guy Carpenter’s Chris Ross and Blake Berman
The US casualty space remains in a dynamic hard market driven by increases in loss severity influenced by legal system abuse and economic and medical inflation. The insurance industry continues to implement proactive strategies across pricing, underwriting, policy language and legislatively to meet this challenge head on and to ensure sustainability and profitability going forward.
The Casualty Loss Landscape
The sector continues to face uncertainty around the loss cost landscape. Legal system abuse remains a challenge, evidenced by a 67% increase in assets under management dedicated to litigation financing between 2019 and 2024. During this same timeframe, plaintiff spending on advertising increased nearly 9% annually and the US continues to have increases in cost of care. This combination has fueled an overall increase in loss severity, highlighted by a 10.5% annual compound increase in the median size of the top 100 verdicts since 2014 – a trend that has only accelerated in recent years.
Countering Actions
To ensure the long-term viability of the occurrence-based liability product, the insurance industry continues to use a multipronged framework centered on four key areas:
Pricing: As exposure to high-severity loss outcomes increased, more premium per unit of exposure was needed. The insurance sector reacted quickly and has secured a cumulative exposure-adjusted pricing increase of over 155% since 2015. Pricing has continued to increase in 2025 with excess liability rates up 15% or more on average through midyear. As a result, Guy Carpenter estimates that the cumulative rate increases achieved now exceed loss trend by more than 64 points in the last five years, more than making up for any deficiency.
Limit reductions: With accelerating severity, carriers are actively reducing volatility in their portfolio by shedding capacity. Last year we noted a 30% to 50% reduction in average capacity offered by carriers for excess casualty. This decrease has continued in 2025, most notably in the high-excess segment, where limits have come down by nearly 20% YoY.
Terms and conditions: The shift to non-admitted products continues, with E&S market occurrence liability premiums growing by 17% in the first half of 2025 versus only 8% growth in admitted writings. This is the seventh consecutive year of E&S liability premium growth of 12% or more. With legal theories pushing boundaries, carriers continue to respond by reducing breadth of coverage to ensure policies provide affordable protection for what is intended, especially in the more difficult legal jurisdictions.
Legislative efforts: The industry is focused on legislative action to close loopholes and ensure their customers have access to affordable insurance coverage with an insurance product that allows them to operate confidently. At present, 13 states have passed some form of litigation reform, with 20 others having legislation under consideration.
Guy Carpenter's Perspective
Guy Carpenter views today’s US casualty market as an ongoing adaptation to the evolving nature of casualty risk. Carriers are leading these efforts by taking necessary steps to position their go-forward portfolios for profitability.
While there is risk, there are also opportunities, and those carriers and reinsurers that take a measured approach to managing risk and do not overreact to current market noise are best positioned to take advantage of what we see as clear opportunities going forward.
Guy Carpenter works closely with our clients and advocates strongly for reinsurers to use client-specific assumptions grounded in individual companies’ underlying policy and claims data. We are committed to ensuring our clients are optimally positioned for success, and that the reinsurance programs we place allow them to capture the opportunities they see in this volatile market landscape.