Category Archives: General Liability

Auto Insurance, Business Insurance, General Liability, Homeowners Insurance, Insurers and the Economy, Market Conditions, Workers Compensation

Resilient U.S. P/C Market Performance Sets Stage for a Complex 2026

Leave a comment

By William Nibbelin, Senior Research Actuary, Triple-I 

The U.S. property/casualty insurance industry demonstrated notable resilience throughout 2025, navigating a landscape marked by significant regional catastrophes and shifting economic pressures, according to the latest Insurance Economics and Underwriting Projections: A Forward View report from Triple-I and Milliman.

As the industry moves into 2026, the report notes, it does so from a position of historical strength yet faces an increasingly nuanced outlook shaped by market softening and lingering macroeconomic uncertainties.

The Triple-I/Milliman report is based on data through the third quarter of 2025,

Industry-Wide Performance and Profitability

The P/C insurance industry is forecast to achieve its lowest net combined ratio (NCR) in over a decade for the full year 2025. This achievement is particularly significant, given the challenges faced early in the year, including the devastating Los Angeles wildfires in January 2025.

A key driver of this success was the first Atlantic hurricane season with no U.S. landfall in 10 years. However, while profitability reached peak levels, top-line growth began to moderate. Aggregate net premium growth across all lines for 2025 is expected to be 5.9 percent, reflecting a continued slowing of the growth rate compared to 2024.

“We’re on track to achieve the lowest net combined ratio in over a decade, thanks in part to a hurricane season that spared the U.S. and strong homeowners performance, even after the Los Angeles fires in Q1 2025,” said Patrick Schmid, Ph.D., chief insurance officer at Triple-I. “Growth in personal lines premiums remains solid, and the narrowing gap between personal and commercial lines performance points to a cautiously optimistic outlook for the industry.”

Economic Outlook: Stability Meets Vulnerability

While the broader U.S. economy and the P/C sector remain stable, economists are keeping a close watch on emerging risks. The industry’s ability to maintain its momentum in 2026 may be tested by rising political and geopolitical tensions, as well as potential shifts in the labor market.

“Overall, the P/C insurance industry and the broader U.S. economy remain stable,” said Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I. “However, despite stronger-than-expected GDP growth in the third quarter, a closer look at the data suggests the U.S. economy may be increasingly vulnerable to rising economic, political, and geopolitical uncertainty. In particular, P/C replacement costs could still see significant increases in 2026, weighing on overall P/C performance.”

Léonard further highlighted that the labor market serves as a critical indicator, noting that a rise in the unemployment rate toward 5.0% over the next six months could potentially trigger an economic contraction.

Underwriting Results by Line of Business

Personal lines continue to anchor the industry’s profitability. Personal auto remains a standout performer with a forecast 2025 NCR of 94.4, an improvement over 2024 results. However, premium growth in this sector has slowed significantly, with net written premium growth expected to land at 3.6 percent — its lowest level since 2020. Homeowners’ insurance also showed remarkable recovery. Despite the heavy losses from the Los Angeles fires in the first quarter, the line’s 2025 NCR is forecast at 99.6, placing it on par with 2024 performance.

Commercial lines continue to face ongoing challenges in liability. While most of the industry enjoys profitability, general liability and commercial auto remain the only major lines forecast to stay above a 100 NCR for 2025. General liability continues to struggle with the highest Q3 direct incurred loss ratio reported in over 15 years.

Jason B. Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, detailed these persistent hurdles.

“General liability faces continued challenges,” Kurtz said. “Our 2025 net combined ratio is forecast to be similar to 2024, among the worst in over a decade. Losses are high, with Q3 direct incurred loss ratios being the highest in at least 25 years.”

He added, “While conditions may improve in 2026-2027, profitability remains a hurdle. Our general liability’s NCR expectations have risen following a challenging Q3, reflecting ongoing pressure in the segment. While some coverages are experiencing soft market conditions, aggregate premiums have been growing, but not enough to keep pace with loss trends.  We anticipate additional premium growth will be needed to improve general liability profitability.”

Workers’ compensation remains the strongest performing major line, with NCRs forecast to stay in the high 80s to low 90s through 2027. This sustained success is attributed to disciplined risk management and favorable prior accident year development.

“NCCI’s latest loss ratio trends continue to show declines,” said Donna Glenn, NCCI chief actuary. “In the current environment, modest year-to-year decreases are still expected.” Glenn noted that “while there have been a few rate increases filed in NCCI states, every state has its own story, and based on the latest data, NCCI does not anticipate any imminent reversal of current trends.”

Auto Insurance, Business Insurance, General Liability, Legal Environment

Claims Severity Drives Liability Insurance Losses

Leave a comment

By William Nibbelin, Senior Research Actuary, Triple-I

Economic and social inflation have added a staggering $231.6 billion to $281.2 billion in increased liability insurance losses and Defense and Cost Containment expenses in auto and general liability lines, a new report by Triple-I and the Casualty Actuarial Society.

The study – The Impact of Increasing Inflation on Liability Insurance 2015 – 2024 – says this structural rise in loss costs is amplified by what is broadly identified as legal system abuse.

The dual engine of increasing inflation

The analysis focuses on the total impact of increasing inflation determined through actuarial methods that are unable to decompose the precise contribution of economic inflation versus the role of what Triple-I characterizes as “legal system abuse” — policyholder or plaintiff attorney practices that increase costs and time to settle claims to the detriment of consumers, businesses, and the economy.  These practices include increasing litigiousness, third-party litigation financing, and soaring jury awards.

Claim severity powers losses

Across all lines analyzed, claim severity – not frequency – emerges as the primary driver of the escalating losses in liability lines of insurance. While the number of claims (frequency) has either generally declined or remained below pre-pandemic levels across the study period, the average cost per claim (severity) has soared. In commercial auto liability, for example, frequency has fallen dramatically since the pandemic, yet losses have still increased relentlessly because severity has risen 93.5 percent between 2015 and 2024.

Auto Liability

The report’s traditional focus on auto liability lines continues to show the most significant dollar-based impacts.

  • Personal auto liability: Increasing Inflation added between $91.6 billion and $102.3 billion to losses and DCC for the 2015–2024 period. This represents 8.7 percent  to 9.7 percent of losses and DCC for the period and an increase of 20 percent to 26 percent from the previous analysis on years 2014 through 2023. While the implied compound annual impact is lower than in the commercial sector, the dollar amount is huge due to the line’s immense underlying size. Personal auto severity has accelerated significantly post-2019, nearly tripling its compounded annual growth rate to 10.9 percent from 2019 to 2024. Premiums are only just beginning to rebound from pandemic-era lows, lagging the rise in losses.
  • Commercial Auto Liability: This line continues to sustain higher inflation rates in percentage terms. The total impact of increasing inflation reached $52.0 billion to $70.8 billion (22.6 percent  to 30.8 percent of booked losses). This represents an increase of 22 percent to 27 percent from the previous analysis.

A compelling cross-data set comparison with the Triple-I 2025 report, Review of Motor Vehicle Tort Cases Across the Federal And State Civil Courts, suggests that the “excess value” extracted by motor vehicle tort lawsuits—a clear measure of legal system abuse—was approximately $42.8 billion between 2014 and 2023. This quantitative finding suggests legal system abuse accounts for roughly one-third of the total Increasing Inflation effect in auto liability losses.

General liability lines

This year’s analysis expands to quantify the impact across broader general liability lines for the first time, revealing inflationary rates that are equally, if not more, dramatic in percentage terms.

  • Other Liability – Occurrence: Increasing inflation added between $83.4 billion and $103.3 billion to losses and DCC for the 2015–2024 period. This inflationary problem is comparable in dollar terms to personal auto liability, despite having only about one-third of the loss volume. Its implied annual impact of 3.7 percent on a paid basis is the highest of all the lines studied. Severity in this line grew at a compound annual rate of 6.8% from 2015 to 2024, far outpacing the Consumer Price Index All-Urban (CPI-U).
  • Product Liability – Occurrence: Increasing inflation added between $4.6 billion and $4.8 billion to losses and DCC for the 2015–2024 period. The smallest line examined exhibits the most dramatic severity trend with a compound annual growth rate of 22.3 percent between 2015 and 2024, resulting in a 512.5 percent severity increase overall. The effects appear to be accelerating, with the impact on Accident Year 2024 alone estimated at over 50% of that year’s booked losses.

For the “claims-made” categories of these liability lines (“other liability” and “product liability”), the study was unable to develop credible quantitative estimates due to shifts in business mix, data variability, and the inherent heterogeneity of the underlying risks. However, these lines have certainly not escaped the increasing inflationary environment.

Looking ahead

The data confirms a difficult truth: Even as general consumer price inflation (CPI-U) moderated to 3.0 percent in 2024—a reduction from the 2021-2023 average of 5.6 percent—the loss inflation in liability insurance remains structurally elevated. This means the economic tailwinds that temporarily exacerbated the problem are lessening, but the foundational issues of legal system abuse persist, locking in a higher rate of loss for the foreseeable future.

For consumers and businesses, this translates directly into higher premiums and a greater strain on their financial well-being. The challenge for insurers is the need to adapt to an elevated inflationary environment to effectively manage future liabilities. Recognizing and addressing the pervasive influence of legal system abuse is therefore essential for both managing risk and protecting consumers and businesses from ever-rising costs.

Triple-I continues to foster a research-based conversation around legal system abuse. For an overview of the topic and other helpful resources about its potential impact on insurers, policyholders, and the economy, check out our knowledge hub.

General Liability

Eliminating Friction From General Liability “Towers”

Leave a comment

By Michael Menapace, Triple-I Non-Resident Scholar

Michael Menapace is a professor of insurance law at Quinnipiac University School of Law, a Fellow of the American College of Coverage Counsel, and co-chair of the Insurance Practice Group at Wiggin & Dana LLP.

Brokers and companies routinely work to assemble multiple insurance policies to build towers of general liability (GL) coverage.  They now have a new option that eliminates much of the friction that can occur in underwriting and claims. 

For example, when a mass-casualty event occurs, insurers at the primary and lower excess layers may be incentivized to seek an early exit from the claim with as little claim expense as possible; as a result, they may overpay to resolve one claim while providing minimal support to the policyholder defending the other claims. Tension between layers also can arise when upper-layer carriers seek to place as much responsibility as possible on the lower-level carriers who are seeking to minimize their role. 

On the coverage side, policyholders can find that their traditional layers of excess coverage may be subject to differing terms, such as whether they provide for a defense.  Even when the excess tower contains follow-form policies, inconsistencies can occur when carriers take different positions on coverage, claim value, litigation/settlement strategy, and so forth. 

As a result of all of this is, gaps can open in the multilayer tower. For example, a recent claim that was the subject of a lawsuit arising from a large casualty loss in Florida involved one excess insurer seeking to enforce an anti-stacking provision that limited coverage for an event to one payment from the insurers equal to the highest policy limit among the tower participants.  In another claim, the higher-layer insurers argued that their layers were not triggered because the lower layer insurer had improperly exhausted. 

In addition to these examples, we’ve seen situations in which various excess layers contain different dispute resolution procedures, are subject to varying states’ laws, or have requirements of being resolved in differing jurisdictions. Brokers and policyholders can find managing their excess tower time-consuming and challenging at a time when they could be focusing on the defense of the mass casualty event or other large loss. 

Addressing these challenges

Chubb, Zurich, and National Indemnity (the reinsurance arm of Berkshire Hathaway) have formed a new facility that seeks to eliminate some of these challenges. It provides a single layer of commercial umbrella coverage up to $100 million, typically following a $10 million primary layer.  Many of the terms will be familiar to brokers and policyholders: Coverage A for Bodily Injury and Property Damage, Coverage B for Personal and Advertising Injury, and an Optional Coverage C for Auto and Employers Liability. 

A unique feature in the United States, the program has “single-desk” underwriting style so that brokers can work with one point of contact for the underwriting of the entire layer of excess coverage.  Flexibility is also an advantage because the program is being written on a surplus lines basis, which means more discussions can be had on terms and conditions. 

Traditionally, general liability coverage is written on an occurrence basis, which can keep the insurer on the risk for decades after the policy period expires.  Insurers price that long-tail exposure into premiums.  This new program can be more affordable because it is written on a claims-made basis, while including a multi-year extended reporting period to protect the policyholder.  This can save the policyholder money when compared to traditional programs.

Just like underwriting, claims will be handled with single point of contact, with one of the carriers taking the lead.  Once the claim is tendered and being defended, the fact that this group of leading insurers is on the risk means the collective experience of some of the industry’s biggest, most sophisticated carriers is at the disposal of the insured.  If a coverage dispute does arise, the policy provides for resolution via a single arbitration that applies consistent procedures and the law of a single state – again, streamlining the process and resolution for the policyholder.

While some of the features are offered in the London market, this provides brokers and policyholders with a U.S.-based solution with added benefits and features.