2025 Q3 Umbrella and Excess Market Update

The excess and surplus lines (E&S) insurance market, particularly in excess casualty, continues to exhibit robust growth amid persistent challenges as we enter the second half of 2025. Surplus lines premiums surged 13.2% year-over-year to $46.2 billion in the first half of the year, driven by increased demand for coverage of complex, high-risk exposures that standard markets are reluctant to underwrite.¹ Rate increases largely stabilized in Q2, up 5-10% for general liability (GL) and excess layers, though distressed risks face steeper hikes.

While capacity remains abundant in many lines, excess casualty stands out as an exception, with carriers maintaining underwriting discipline in response to social inflation, rising nuclear verdicts (judgments over $10 million), and elevated auto liability claims. New entrants and facilities are adding capacity, but the market remains segmented by risk class, with tougher sectors like transportation and habitational experiencing tighter capacity and terms and conditions.

Looking ahead, we anticipate continued rate pressure through the end of 2025, tempered by competition and innovation in E&S solutions.

Umbrella and Excess Insurance Market Overview

The E&S market has expanded significantly in recent years, and this momentum carried into 2025. Excess casualty, which provides liability coverage above primary limits, is absorbing much of this growth, as admitted carriers pull back from high-hazard risks due to factors like third-party litigation funding and a 27% rise in nuclear verdicts from 2022 to 2023.

Key trends include:

Capacity dynamics: Most lines have surplus, but excess casualty is constrained. New players are entering, alongside follow-form, broker-created facilities that provide more options for layered programs. However, some carriers are reducing line sizes to $2-$3 million for challenging risks like heavy auto or habitational.

Rate trends: Increases stabilized in Q2, with some excess casualty rates moderating slightly despite ongoing loss cost pressures. Primary programs face upward adjustments due to defense and indemnity cost inflation. For low/moderate hazard classes, umbrella rates are up 8%-15%, while high-hazard excess layers could see +20% increases.

Challenges: Social inflation and litigation abuse persist, with median nuclear verdicts rising to $44 million in 2023 from $21 million in 2020. As of 2024, surplus lines accounted for about 35% of liability premiums, up from 26% in 2018, as risks shift from admitted markets.²

Perspectives From Insurance Carriers

Carriers are voicing concerns over profitability in excess casualty, with reinsurers influencing primary and excess strategies. While direct quotes specific to 2025 excess casualty are limited, recent public statements from carrier executives reflect a cautious stance.

What to Expect Going Forward

As we move through Q3 and into Q4 of 2025, the excess casualty market is poised for measured hardening, with rates likely up 8-20% depending on hazard class and loss history. Capacity will remain selective, pushing more business to E&S and international markets like Bermuda and London.

Positive developments include potential tort reforms in additional states, which could mitigate nuclear verdicts and somewhat stabilize claims costs by 2026. Brokers and insureds should prioritize early renewals, risk management tools (e.g., telematics for auto), and diversified programs to navigate gaps.

Overall, while challenges like social inflation persist, increased competition and innovation offer opportunities for well-managed risks.