2025 Q2 Umbrella and Excess Market Update

It's hard to believe we're almost halfway through 2025. The umbrella and excess market continues to ebb and flow, but overall the same trends from prior years remain true. Foundational problems such as third-party litigation funding, increased nuclear and thermonuclear verdicts and general legal system abuse continue to plague carriers and subsequently, insureds. The bright spots in the market continue to shine through, however. Let's take a look.

Continued Capacity Management Might Not Be That Bad

As the new normal of a firming umbrella and excess market continues to unfold, adapt and change, one of the building blocks of the market shift has been the reduction of carrier capacity. While we've navigated this change over the last 4 to 5 years, capacity continues to shrink in certain verticals.

However, it may not be all that bad. We've heard the joking phrase "$2M or $3M is the new lead $5M," and for certain verticals like habitational, heavy auto-driven risks and accounts with frequent and severe loss history, this rings especially true.

While it may be a difficult pill to swallow for accounts that are still fortunate enough to be receiving lead capacity of $5M or greater, it's important to be cognizant of the creativity that's available in the market when enticing carriers to offer shorter lead limits. In certain instances, finding a middle ground with a carrier to offer shorter limits, but in turn more aggressive pricing than they could to if they kept their expiring capacity, may yield better pricing overall.

Increasing Claims Costs and the Rise of the Thermonuclear Verdict

While we touched on the rise of the thermonuclear verdict — judgments and settlements in excess of $100M — in our 2025 US Casualty Market Outlook it's paramount to continue to watch how many more such verdicts occur in 2025.

According to a report from Marathon Strategies, the number of cases with nuclear verdicts increased in 2023 by 27% from 2022, a 15-year high, with the median nuclear verdict rising in 2023 to $44 million from a low of $21 million in 2020.* These verdicts covered 47 unique industries, encompassing 89 lawsuits. These 89 cases are the most in any year since the Great Recession, and 27 of them went thermonuclear; of those, five cases went over $500 million and two over $1 billion.

The bright spot is that more states are considering measures to limit the size and scope of these verdicts, including Florida, Georgia, Texas, Utah and West Virginia, among others. These measures will be an important, evolving change to keep an eye on as the year progresses and into 2026. Hopefully, they'll alleviate some of the strain on insurers and reinsurers, as these verdicts increase costs passed to insureds in premium increases or even complete removal of insurance support.

Market Knowledge Still Reigns Supreme

It's important to take a step back and digest the fact that the flow of business into our marketplace continues to increase, which has ultimately increased carrier competition. Carriers still have budget goals, some more aggressive than others. While factors continue to limit capacity and increase pricing, tactfully navigating the marketplace with an accurate understanding of the various avenues a placement may go will ultimately yield the best solution available.

It's more important than ever for the insured, the retail agent and the wholesale broker to work together cohesively and overcommunicate what they're seeing as well as manage expectations for renewals and new business. Market timing is a continued challenge, so setting goals and expectations up front about things like need-by dates must be communicated to carriers, who are inundated with increased submission flow and staffing shortages. The capacity is out there; it's up to the collective broking team to secure it in the most competitive and comprehensive way possible.