The US casualty insurance sector continues to operate in a challenging environment marked by persistent increases in loss severity, according to Guy Carpenter executives Chris Ross (pictured above, left) and Blake Berman (pictured above, right).
The market remains hard, with insurers responding to pressures from legal system abuse and rising economic and medical inflation through a range of strategies focused on pricing, underwriting, policy language, and legislative advocacy.
Legal system abuse has contributed to a 67% rise in assets under management for litigation financing between 2019 and 2024. Over the same period, plaintiff advertising spending has grown by nearly 9% annually.
The cost of care in the US also continues to climb. These factors have led to a 10.5% annual compound increase in the median size of the top 100 verdicts since 2014, a trend that has accelerated in recent years.
The commercial auto insurance segment, a key component of the broader casualty market, illustrates the ongoing financial pressures facing the industry. Over the past two years, net underwriting losses in US commercial auto have exceeded US$10 billion, with 2024 alone accounting for US$4.9 billion in losses.
These losses are driven by rising loss severity, increasing claims costs, and adverse development of prior-year loss reserves. Despite some operational improvements, the segment has now posted underwriting losses for 14 consecutive years, underscoring the persistent challenges in managing profitability within casualty lines.
To address these conditions, the industry has implemented a multipronged approach. On pricing, insurers have secured a cumulative exposure-adjusted increase of more than 155% since 2015. Excess liability rates have risen by 15% or more on average through mid-2025.
Guy Carpenter estimates that the cumulative rate increases now exceed loss trend by over 64 points in the past five years.
Carriers have also reduced volatility by cutting capacity. In the past year, there was a 30% to 50% reduction in average capacity for excess casualty, with a nearly 20% year-over-year decrease in high-excess segment limits in 2025.
The market has seen a shift toward non-admitted products, with E&S market occurrence liability premiums growing by 17% in the first half of 2025, compared to 8% growth in admitted writings. This marks the seventh consecutive year of E&S liability premium growth of at least 12%. Carriers are narrowing coverage, particularly in challenging legal jurisdictions, to ensure policies remain affordable and focused on intended protections.
Legislative action remains a priority, with the industry supporting reforms to close loopholes and maintain access to affordable coverage. Thirteen states have enacted some form of litigation reform, while 20 others are considering similar measures.
Guy Carpenter said the US casualty market is adapting to the evolving risk landscape.
Carriers are leading these efforts by taking necessary steps to position their go-forward portfolios for profitability. While risks persist, measured risk management and a disciplined approach will allow carriers and reinsurers to capitalize on emerging opportunities.
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