2026 Q2 Umbrella and Excess Market Update

While challenges persist in the E&S casualty market, increased market competition, higher carrier growth goals and positive combined ratio performance have tempered premium and rate increases and lowered them to levels not seen in the last few years. While the difficult E&S casualty market remains the new normal, certain verticals and well-performing insureds have benefited.

Let's take a look at what's happened in Q2.

Continued Capacity Expansion and Competition

Capacity has expanded notably since the height of the hard market, fueled by strong prior-year underwriting results, reinsurance capital inflows from a quieter catastrophe environment.^1,2,3 New entrants, including London and Bermuda markets as well as various MGAs/MGUs and surplus lines carriers, have also been a catalyst for increased competition.^1,3

Property market softening has also released capital into the casualty sector as carriers continue to selectively chase growth and profitability.^1,3 Pricing has moderated significantly from the peaks of 2023 — 2024, but rate increases persist in challenged segments to keep pace with 12 — 15% loss-cost trends.^1,2 Results remain profitable for disciplined carriers, though combined ratios in key casualty lines (e.g., general liability and commercial auto) continue to face headwinds compared to the broader P&C market's improving profitability.^1,2

As of now, the casualty market can be described as bifurcated or fragmented versus uniformly "hard" or "soft."^1,3 Competition has further intensified for desirable business, creating downward rate pressure on lower volatility classes of business.^1,3 Carriers and MGAs are continuing to try and diversify their portfolios as well, leading to more creative structures on excess towers and the incorporation of broker-led and in-house capacity via sidecar products.¹

Casualty Trends and the Factors Impacting Results

Based on our team's book of business, here's what we're seeing in the E&S casualty market thus far in 2026:

• Primary GL/Products: Flat to +5 — 10% for most; competitive minimums for clean risks.^1,3
• Excess/Umbrella: Flat to low double-digits (higher for poor-loss or auto); middle-market focus. Higher for less desirable classes like Habitational/Heavy Auto.^1,3
• Commercial Auto: +5 — 15% (or more for large fleets/poor history); 56+ consecutive quarters of increases, though slowing.^1,2,3

While the above is a very broad range and not vertically specific, it does paint a different and arguably more positive picture than prior years. There are key factors, however, that will continue to impact casualty results as the market forges forward in the new normal:

• Social inflation and claims severity: Loss trends holding at 12 — 15%, with rising indemnity, defense costs and settlements.^1,2 Includes broader definitions of liability, juror desensitization to large awards and compounding attritional claims.^1,4
• Nuclear verdicts and litigation environment: Persistent driver; see detailed section below. Third-party litigation funding (TPLF, now multibillion-dollar industry) prolongs cases and boosts plaintiff leverage.^4,5 Some state tort reforms (e.g., Florida/Georgia on bad faith, premises liability, litigation funding transparency) offer hope but impact is long-term and unproven in courts.^1,5,6
• Other: PFAS, abuse claims (sexual/physical), auto fleet exposures, venue/jurisdictional volatility, regulatory shifts (e.g., extended statutes for abuse) and emerging risks (AI, telehealth in life sciences). Carriers continue to demand robust risk controls (telematics, CCTV, training, protocols) and data-driven underwriting.

Trying to Level the Legal Playing Field

States and carriers are not giving up the fight to make the legal process more transparent. If successful, it should yield impactful results which could trickle down into the casualty world by reining in some of the nuclear and thermonuclear verdicts or at least reducing the frequency by which those verdicts are awarded. While we've touched on nuclear and thermonuclear verdicts in almost every prior quarterly update, we wanted to provide insight on additional factors impacting our casualty world.

Claim anchoring is a core psychological tactic: plaintiffs' attorneys introduce an extraordinarily high damages figure, often in opening statements or closing arguments, to serve as an "anchor" in jurors' minds. Because noneconomic damages (pain/suffering) lack objective benchmarks, jurors tend to negotiate downward from this inflated starting point rather than building from zero or evidence-based figures.

States, insurers and defendants are aggressively trying to push for anti-anchoring reform.^4,5 Georgia's SB 68 and more broadly SB 69, signed into law in April 2025, are part of a broader Tort reform package to try and pull the state back from its high number of $10M+ personal injury awards.^4,5 Other states, outlined below, are trying to follow in Georgia's footsteps:^5,6

• Arizona and Montana (2025): Bar "foreign entities/persons of concern" from financing litigation; Montana adds recovery caps and explicit prohibitions on funder influence over cases.^5,6
• West Virginia and Wisconsin (2025): Automatic disclosure requirements for TPLF arrangements.^5,6
• Indiana and Louisiana (recent/2025): Funding agreements expressly subject to discovery; ban on funder control over litigation/settlement decisions.^5,6
• Oklahoma (2025): Disclosure of funding agreements upon request.^5,6
• Kansas (2025): Mandatory disclosure of TPLF agreements within 30 days of filing.^5,6
• Colorado (2025): Requires foreign financiers to provide information to the Attorney General.^5,6
• Utah (recent): Enhanced transparency requirements.^5,6

These state and federal level actions, like the Litigation Funding Transparency Act, really aim to promote transparency and deter legal system abuses all while reducing the role that Third Party Litigation Funding plays in the entire legal process. These efforts can't help but be viewed as a long-term positive for the industry, however the effects will be very gradual. While there are always challenges with reforms passing, there has been bipartisan support for the concern regarding their party litigation funding and its distortion of our legal system.

To effectively provide creative and competitive solutions in the current market, it is important to partner with a wholesale broker that understands not only vertical-specific trends, but the casualty market more broadly as well. Communication and accurate, detailed information are key as carriers continue to walk away from opportunities, which ultimately doesn't solve the problem of securing coverage.

Our RPS Casualty team is ready to help solve your problems and earn your trust, so please do not hesitate to reach out.