Over the last several years, commercial buyers have felt the pain in the liability market. Each year, insurers have pushed significant rate increases for auto liability, general liability, and umbrella and excess liability to try to stay ahead of rising loss trends. And each year, the goal posts seem to shift as the industry realizes that their estimates of historical losses were still too low, driving another round of significant rate increases.
The release of the insurance industry’s 2025 results — and data from S&P Capital IQ Pro — offers fresh insights about how insurance buyers can secure better results at renewal in what remains a difficult market.
Losses continue to pile up
Companies that sell products know the cost of goods sold at the time of sale. Insurers, however, don’t know how much writing various insurance policies will cost them until years in the future when all claims have settled.
Consequently, each year, insurers update their estimates of how much it will ultimately cost to settle claims from prior years based on the newest information available. When those estimates go up, insurers’ financials take a hit, and we say there has been adverse prior year development.
The 2024 numbers made headlines as the industry saw a record amount of adverse development in both commercial auto liability, which increased $3.7 billion or about 1.8%, and other liability occurrence (OLO), which increased $10.3 billion or about 3% increase. OLO is used as a proxy for the direction of the general liability and umbrella and excess markets.
In 2025, the industry saw $1.8 billion of adverse development for commercial auto and $7.3B for OLO. Although still higher than the industry would like, the $1.8 billion in auto represents only the second time since 2019 that the adverse development has been kept below $2 billion.
The $7.3 billion in OLO adverse development — while lower than the prior year — is still significantly above historical norms and could signify continued strain in that market.
Soft market years
Part of the struggle in getting ahead of adverse development has been the consistent year-over-year deterioration of the so called “soft market block,” which encompasses the estimates for claims occurring between 2016 and 2019. In the 2025 results for commercial auto, the soft market years finally started to plateau, with estimates slightly decreasing. However, in OLO, those years still saw $1.8 billion in adverse development.
The difficulty in accurately estimating even relatively mature policy years could lead to conservatism in the industry when it comes to pricing and terms and conditions, particularly in umbrella and excess liability.
Hard market years
In 2020, the soft market came to a halt. Insurers, now keenly aware of elevated trends, increased rates in an attempt to keep up with rising claim costs. But it wasn’t enough, and in the years since, casualty insurance buyers have had to absorb the compounding impact of significant annual rate increases as liability insurers have tried to get ahead of deteriorating loss trends. (See Figure 1.)
Throughout the decade, despite the insurance industry’s collective recognition of escalating liability losses, insurers have repeatedly underestimated how bad those losses would get. In 2025, almost $1.6 billion of the adverse development in commercial auto came from accident years 2022 and 2023. And in OLO, over half of the adverse development ($3.9 billion) came from accident years 2021 to 2023.
The bottom line: The industry continues to struggle to get ahead of rising liability loss trends. And it will likely continue to face headwinds for these accident years in commercial auto and OLO during 2026.
Preparing for continued headwinds
Although there are a few bright spots, the 2025 results for commercial auto and OLO still paint a fairly bleak picture. The industry has failed to get ahead of escalating trends from a reserving perspective and has consistently taken underwriting losses on these two lines.
Commercial insureds should thus continue to expect significant pressure on rates and terms and conditions for auto liability, general liability, and umbrella and excess liability in the year to come, even if the market is slightly stabilized relative to the past few years.
For buyers, it’s vital to differentiate risk. Buyers should meet regularly with carrier partners — even when renewals are not imminent — to highlight data and controls that demonstrate their superior approach to risk management, and to solidify their commitment to relationship buying.
Buyers should also consider the potential value of alternative risk solutions. Fronting, structured solutions, captives, and more can enable organizations to trade dollar-swapping premium for collateralized risk retention.
Finally, buyers may be able to leverage more favorable results in other lines, such as workers’ compensation, to generate negotiating leverage for umbrella and excess liability and other more challenging lines. Buyers can work with their brokers to push for more favorable terms on challenging lines by positioning workers’ compensation as part of a broader relationship with insurers.
For more market insights on casualty and more, explore our latest Lockton Market Update.
