2025 Q4 Umbrella and Excess Market Update

As the Excess and Surplus (E&S) insurance marketplace enters the final weeks of 2025, the casualty segment reflects a market in transition with moderating rate growth, selective capacity deployment and ongoing underwriting discipline driven by social inflation and nuclear verdicts.

While overall E&S premiums surged 13.2% year-over-year to $46.2 billion in the first half of the year, casualty lines have absorbed much of this momentum, now representing over 52% of E&S direct premiums written.¹ This growth highlights the segment's role as a safety valve for risks shunned by admitted carriers, but also showcases vulnerabilities such as reinsurer scrutiny on loss reserves and third-party litigation funding, which are projected to reach $31 billion annually by 2028.²

Rate and Pricing Trends: Moderation with Upside Risks

While capacity has stabilized and seen new entrants in certain verticals, the excess casualty tower remains a focal point of caution. Pricing forecasts continue pointing to a hardening in select layers even as primary placements see relief. After years of double-digit hikes, casualty rate increases have largely stabilized in Q2 and Q3 2025, averaging 5-10% for general liability and lower excess layers, down from 15-20% peaks in 2023-2024.

However, distressed risks like habitational real estate, heavy auto and construction exposures continue to face steeper adjustments of 15-25%, fueled by thermonuclear verdicts exceeding $100 million³ and unresolved COVID-era litigation backlogs.

Primary casualty remains competitive with moderate and lower hazard accounts seeing rate increases in the mid to lower single digits. More challenging classes like habitational, heavy liquor exposure or accounts with frequency of loss are typically seeing increases in the higher single digits or lower double digits. Of course, these observations are generalizations that summarize broader market trends, however the influx of capacity that's come into the primary space — especially for middle-market business — has tempered further rate increases on well-performing accounts.

In contrast to the primary casualty space, excess rate increases are creeping into the lower double digits and on loss driven accounts, anywhere from 15% and higher. Carriers will continue to provide capacity, though diligent and strict underwriting will continue. Some markets are wiping their hands of accounts if they can't get what their pricing model is telling them.

Carriers continue to worry about attachment and auto exposure as well. Commercial auto just had its fourteenth consecutive year of underwriting losses, posting a $4.9 billion underwriting loss in 2024 alone, with that figure expected to grow by the end of 2025.⁴

Forecasts for 2026: Measured Hardening Ahead

While capacity and competitive deals can be had, we must continue to focus on what's driven the casualty market to this point: continued social inflation, legal system abuse and nuclear verdicts.

While it's a bonus to continue to get new capacity and investment capital driven into the casualty space, the factors that led the market here haven't changed. As we touched on in earlier market updates, states are passing various bills aimed at tempering nuclear verdicts and increasing tort reform. However, the practicality and applicability of those changes may not be reflected in the E&S marketplace for years.

Looking to 2026, the message is clear: capacity is there, and turbulent pricing can be tamped down by diversifying towers, being cognizant of incumbent's attachments and leveraging E&S's agility to outpace admitted market constraints and provide creative and competitive solutions.