State of the Insurance Market:
2025 Outlook

Casualty

2024 was a challenging year for the casualty market. Competition for business was more evident than in previous years for many risks, yet premiums still rose for clients in many industries.

Geography and complexity of risk still play a critical role in the cost and availability of casualty programs today. Many clients can still expect substantial rate increases for auto and umbrella liability, while workers’ compensation (WC) remains flat, and general liability (GL) rates will rise slower than in previous years.

Market Conditions

 

We saw signs of increased competition in 2024 and expect that trend to continue in 2025 as insurers seek to grow profitably. There is no indication yet that insurers are seeking to return to the early 2000s, when adding market share via growth was driving pricing down for many clients. That practice is not expected to return until anxiety over a lack of actuarial predictability in large losses eases. Capacity for most clients remains available, albeit at potentially higher attachments, and with the need to use more insurers to complete a program.

Overall, 2025 may be a better year for clients in terms of their casualty placements, but loss trends will ultimately drive outcomes.

Coverage Considerations

 

Auto Liability

2024 saw the auto market continue to deteriorate in many sectors, as insurers struggled with frequency and severity of claims. Excluding the COVID-19 related year of 2021, the widespread adoption of smartphones tracks with a 13-year run of unprofitability for commercial auto insurers. It has become expensive in several states to purchase coverage due to loss and judicial trends. Whenever possible, avoiding monoline auto placements will likely be the best way for clients to obtain the most cost-effective program. However, there are many situations where this is not possible due to the type of industry, including transportation and construction, or exposure where a stand-alone auto program is necessary. In these cases, it is imperative that clients provide full underwriting submissions with driver, loss and safety details. Rates are expected to rise between 5% and 25% based on industry and client loss experience, commitment to loss control, location, radius of operation, driver records, and other factors.

Workers’ Compensation

Workers’ compensation (WC) still remains profitable for most insurers in many industries. The severity increases experienced within auto and GL are mitigated by the regulatory nature of WC. Despite ever-increasing medical costs, as well as a rise in real wages, we do not see any dramatic price hardening on the horizon. 2025 may not experience a rapid change in insurers’ appetite for WC, but there are certainly signs that increased claim activity and changes to experience modification calculations could lead to higher premiums for small and medium clients. Large clients should continue to expect a reasonable renewal of their programs, especially if on a loss sensitive basis. Overall, rates will likely remain flat or within a few points up or down, depending on size and type of program, as well as loss experience.

General Liability and Umbrella

Clients have been informed about nuclear verdicts, social inflation and litigation funding, but these trends showed no signs of slowing in 2024 and will continue in 2025 with a few caveats. First, to offset the use of litigation funding companies, several jurisdictions are considering transparency laws that require a plaintiff to identify where they are getting the money to bring the suit. This could impact jury perspectives to better understand that an injured party relies on a giant investment company for financial support.

Second, states are addressing potential liability suit caps through additional tort reform. As jury verdicts reach unsustainable levels, increasingly, business leaders and politicians recognize the cost of doing business in a state could drive employers away. Another hope is that the consistent rise in liability premiums, coupled with higher attachment points and smaller umbrella limits, has helped insurers achieve a measure of protection against large claims, allowing them to mitigate premium increases in 2025 and 2026. 2024 saw the continued growth in the excess and surplus (E&S) lines market for GL and umbrella programs.

This ongoing shift from the direct retail market to the E&S market continues to impact clients in many ways and shows no sign of abating in 2025. Premiums are higher, insurer appetites are often narrower, and clients are faced with addressing ways to obtain coverage through alternative options. This shift has impacted many clients, but particularly those unable or unwilling to consider high deductible programs. However, this drive to E&S has had some positive impacts. Additional capacity via new entrants has in some ways stabilized programs in excess of $10M attachment points. Furthermore, London is still a viable and important option for certain clients to consider. The key is to maintain a reasonable timetable and allow for an increased number of insurers participating in an excess liability tower.

As individual umbrella limits have shrunk, the complexity of addressing claims between multiple insurers has risen, and the time frame allowed to respond has condensed. It is therefore increasingly hard for insurers and reinsurers to assess their profitability in the space or for a specific account because of this volatility. This may impact the cost and availability of umbrella liability for the near term as conservative underwriting will remain in vogue.

Prices may increase 3% to 10% for GL and 5% to 35% for umbrella depending on loss experience, industry, and risk improvements. Product liability rates have softened for much of the market, aside from a few tougher risks. Thanks to new capacity, rates will be flat or slightly up, outside of clients with large complex consumer exposures like critical auto, RVs, food, and chemicals.

Exceptionally Challenging Risks, Industries, and Geographies

Several categories of risks face increased underwriting scrutiny:

  • Habitational/residential/social services, real estate, and construction
  • Several manufacturing sectors, such as sports equipment, chemicals, firearms, and pharmaceuticals
  • Education and nonprofits due to sexual abuse and traumatic brain injury concerns
  • Per- and polyfluoroalkyl substances (PFAS)
  • Nonprofits, especially those with abuse or habitational exposures
  • Transportation
  • New York – auto, construction, real estate
  • Georgia, New Jersey, Louisiana – auto

Casualty Rate Forecast

 
Rate Forecast
Auto: +5% to +25%
Workers' Compensation:   -5% to +5%
General Liability: +4% to +10%
Umbrella: +5% to +35%
Products Liability: Flat to +5%*
*Higher for complex consumer risks

Recommendations

 
Checkmark-2024-SOTM

Start the renewal process at least 90 to 120 days in advance, if possible.

Checkmark-2024-SOTM

Package your business to avoid monoline coverage problems, such as standalone auto.

Checkmark-2024-SOTM

Ensure your submission reflects your business as a high-quality risk. Include detailed information that tells your story.

Checkmark-2024-SOTM

Prepare to employ additional insurers to complete your excess liability program.

Captives-Recommendations-SOTM-2024
Casualty-Callout-SOTM-2024

Connect with our
Casualty Practice

Three-Person-Business-Meeting-1250

Don’t settle for off-the-shelf. Get a casualty insurance program tailored to meet the needs and nuances of your industry and specific business challenges.

Find out how we can help >>

From negotiating coverage, price, collateral, or deductibles, Risk Strategies specializes in all facets of Casualty Insurance.

Learn More

Download the Report

 

Our industry and product line specialists have collaborated to provide an update on current trends and market conditions.

We invite you to explore their insights by downloading our latest State of the Insurance Market Report.

Download the Report

State of the Insurance Market Report

 

Explore the Report

Industries

Insurance experts in our industry specialty practices work with our clients and are in the market placing insurance coverage every day. Review their outlook for your industry.

Business Solutions

The experts that support key business product lines across our organization are in the market placing insurance coverage every day. Take a look at their observations on the insurance landscape.

Explore More

Browse other areas within our State of the Insurance Market Report.

The contents of this report are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.