US Liability Insurance Market Nearing “Breakdown” from Rising Claims

A standard P&C insurance policy covers your assets and your liabilities.

According to a new report, however, the liability insurance market is nearing a “breakdown” because of rising claims and other factors.

According to Everest chief executive Jim Williamson, speaking at the Financial Times’ insurance summit in June, liability coverage “won’t be available…at any price” because of the increasing number of liability insurance claims.

Williamson was specifically referring to the commercial liability insurance marketplace, which protects businesses against liability – say, against consumers who wish to file a lawsuit after being harmed by the company’s products or services.

In recent years, insurers have tried to control the marketplace by introducing exclusions – say, for damages caused by forever chemicals or human trafficking.

Insurers have also launched lobbying campaigns to try to make it harder to sue companies.

These efforts, however, have not been enough to save the commercial liability insurance space:

Here’s how Jim Williamson explained the “breakdown” situation during the Financial Times’ insurance summit in June, as reported by FT’s Lee Harris in London:

It won’t be a question of how much you’re willing to pay – the cover won’t be available. No one will offer it at any price. That’s when you start to see a real breakdown.

Why Commercial Liability Insurance Premiums Are Rising

Commercial insurance premiums have risen 23 quarters in a row – with a rise of 8% in Q1 2025 – according to Marsh, the world’s largest insurance broker.

The main reason, understandably, is a rise in the number of claims filed against companies – say, for damages caused by the products or services they offer.

However, it’s not just about legitimate claims being filed; it’s also about fraud and abuse of the legal system, according to some analysts.

Some of the reasons why commercial liability insurance premiums are rising – or are soon to be canceled altogether in the United States – include:

• “Fraud, Legal System Abuse, and Runaway Jury Verdicts”: Everest chief executive Jim Williamson blamed a combination of “fraud, legal system abuse, and runaway jury verdicts” for rising commercial insurance premiums. These three factors are creating “a breakdown of the US legal system.”
• Cultural Attitude Toward Lawsuits: Williamson even blamed a “cultural issue” for contributing to large payouts in the United States. Huge jury awards have become “normalized,” helping more individuals receive enormous payouts from companies who have purportedly done them harm, regardless of whether those huge payouts are justified.
• Rising Claims Overall: As risk increases, insurers raise premiums to compensate. Companies are facing more lawsuits because of the factors above, raising risk and leading to higher premiums.
• Litigation Funders: Commercial litigation isn’t just about everyday people fighting back against mega-corporations. Instead, it’s fuelled by “litigation funders” who abuse their market power and encourage excessive litigation. The issue has become so bad, in fact, that Chubb chief executive Even Greenberg recently urged US insurance companies to cut out lawyers, bankers, and asset managers who worked with litigation funders.
• No New Entrants Bidding Down Rates: When insurance rates rise, it theoretically encourages new insurers to enter the space. However, we’re not seeing that with the recent price rise. According to Christian Dunleavy, chief executive of reinsurer Aspen Bermuda, speaking at the Financial Times’ insurance summit in June, “there is enough fear” in the marketplace to discourage new insurers from joining – and encourage current insurers to leave – the marketplace.

How Insurers Are Fighting Back

Insurers don’t want to leave the commercial liability insurance marketplace unless they have to.

That’s why insurers have launched numerous efforts in an attempt to reduce rising commercial insurance premiums, including:

• Setting Aside Reserve Funds: As reported by the Financial Times, Everest recently announced it had set aside $1.7 billion in reserves to cover losses from its US casualty books. Insurers hold reserves specifically for situations like this, but reserves can’t last forever.
• Creating Exclusions: Some commercial insurers are creating exclusions, preventing companies from being covered for certain damages. Some insurers have created exclusions for corporate data privacy violations, forever chemical pollutant cases, sexual abuse, human trafficking, and assault claims against real estate and hospitality groups, for example.
• Increasing Excess Insurance Premiums: Some insurers are raising rates for excess liability insurance, which is the type of insurance used to cover big claims that exhaust primary policies. Williamson, for example, claims his company Everest was raising excess insurance rates by 20 to 25% per year.
• Lobbying for Increased Company Protection Against Lawsuits: Insurers have also lobbied to make it harder to sue companies, attempting to target the problem at the source.

What Happens Next?

According to speakers at the recent Financial Times’ insurance summit, the commercial insurance market is at an inflection point.

Insurers have raised rates for 23 straight quarters – including a rise of 8% in Q1 2025.

Some insurers, meanwhile, are preparing to exit the marketplace because they can’t raise rates enough to cover risk.

This fear – and the lack of hope for future improvement – is forcing new entrants away from the marketplace.

The end result? Businesses have fewer choices for commercial liability insurance, leading to worse coverage and higher premiums across the United States.