The Casualty insurance market for the manufacturing and distribution sectors is showing signs of stabilization after several tough years.

According to AC Chauhan, RPS executive vice president of Casualty, "Capacity is stable, but there are still pockets of pricing pressure. We're seeing more capacity and competition coming in, but it's coming on the heels of several years of disruption due to measurable pricing inadequacy."

This stability isn't a return to the pre-pandemic soft market, however. Nowadays, underwriters are diligent about scrutinizing exposure growth, loss experience and operational changes on most accounts.

Tariffs and the Potential for Artificial Exposure Growth for Manufacturers

Tariff volatility is reshaping how underwriters assess revenue exposure, creating a disconnect between a company's reported income and its true operational growth, Chauhan explains.

"A manufacturer might normally be a $10 million revenue company, but if tariffs add 30% of pricing pressure, they now show $13 million in revenue without actually selling more product or generating more profit," he says.

Since Casualty insurance premiums are often based on sales, this inflation can make insureds appear riskier than they actually are.

"That's where wholesale brokers need to be proactive," Chauhan says. "It's critical to help underwriters see a client's true exposure base. Some underwriters make the adjustments once they understand what's behind the revenue spike, while others won't, especially if they're managing broader book-level pressures like nuclear verdicts or claim severity."

He added that this is where a skilled wholesale broker can make a measurable difference.

"Two companies might both report $10 million in sales, but one is growing through real demand while the other is simply passing along tariffs," Chauhan explains. "Those are two very different underwriting stories, and how that story is communicated can influence the underwriter's perception of how to price the risk."

Evolving Exposures for Manufacturers

Chauhan also notes that labor dynamics and regulatory changes may create new disruptions in risk profiles. The loss of skilled technical talent can weaken quality control and design oversight, raising potential product liability exposures.

"If a company loses people with design or safety expertise, that impact may not show up immediately," Chauhan says, "but over time, it can create gaps in manufacturing standards that later may possibly turn into claims."

Additionally, the strain on regulatory agencies with a reduced staff may also contribute to future liability concerns, says Chauhan.

"When safety standards and quality aren't enforced or inspections fall behind, problems can slip through the cracks."

Auto Exposures Driving Rates for Distributors

Notable across many sectors, a client's auto exposure is a pervasive driver of loss severity for distributors.

"Clients with trucks on the road have an exposure that's still running hot," Chauhan says. Despite stable capacity, pricing continues to trend upward, and even fleets with better than average loss experience are still seeing increases.

"We're still in an environment where even good accounts are swept up by the tide of auto losses and their resulting litigation," he explains.

Telematics remains an essential requirement of fleet risk management, but Chauhan cautions that it's critical that insureds use the insights from the data to take action.

"Telematics is a great tool if you act on the data," he says. "It can help defend claims and demonstrate accountability. But if telematics shows a driver is speeding or braking hard, and the client doesn't take corrective action, that same data can be used against the client in litigation."

The manufacturing and distribution Casualty market is stabilizing, but it's important to understand and communicate an insured's complete story, whether it's the impact of tariffs on revenue, improved safety initiatives, or driver changes from telematics integration for the best outcomes.

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