Willis: US insurance capacity growing with even ‘meaningful shift’ in excess casualty

By Michael Loney

May 2 - (The Insurer) - The U.S. commercial insurance market has ample and growing capacity, with even a modest increase in the constrained excess casualty sector, according to the latest Insurance Marketplace Realities report from Willis.

In the report released just ahead of the Riskworld 2025 meeting of the risk management community in Chicago, Willis said that the market environment offers opportunities for buyers to secure favorable terms, broaden coverage options, and to re-engage in strategic risk transfer decisions that may have been a bit constrained in recent years.

The broker highlighted robust capital inflows, expanding capacity and a competitive drive among carriers to gain market share.

However, the buyer’s market also has challenges including renewed supply chain concerns, tariffs, volatile financial market and social inflation.

“Insurance carriers continue to pursue growth strategies under the belief that rate adequacy has reached a profitable level across most lines. As a result, underwriting appetite has begun to widen and the elevated pricing seen during the height of the hard market has notably moderated,” the report said.

“Buyers are increasingly encountering a competitive underwriting environment, particularly in lines where capital is not only sufficient but abundant.”

Willis highlighted “a remarkably strong capital foundation”, with policyholder surplus in the U.S. surpassing $1 trillion and global reinsurance capital reaching new record highs of more than $700 billion.

“Capacity is operating at a surplus in most lines of insurance, with one notable exception: excess casualty. However, even in this historically constrained segment, we are seeing a meaningful shift,” the report said.

“New entrants — such as MSIG, Tokio Marine HCC and Canopius — have stepped into the market, bringing much-needed additional capacity.”

Willis continued that the emergence of follow-form facilities, including the broker’s own Gemini auto-follow facility, has also added depth to available layers and increased options for risk managers looking to structure effective excess programs.

The risk landscape is “volatile and evolving”, Willis said, including five consecutive years of $100 billion-plus natural catastrophe losses in the property market and unresolved challenges of social inflation in casualty.

Excess casualty carriers are deploying “smaller, more surgical layers of coverage” that are increasingly targeted by an emboldened plaintiffs’ bar, Willis said.

“The tariffs have not only disrupted the financial markets, but they will put pressure on supply chains and may lead to heightened losses in trade credit. That said, carriers are more measured, data-driven and operationally efficient than ever before, and the lessons of the past decade remain deeply ingrained,” the report said.

Among Willis’s price predictions for 2025 are property changes of -10% to +10% for cat-exposed business and -5% to +5% for non-cat-exposed business.

For domestic casualty business, WIllis expects changes of +2% to +8% for general liability, +10% to +15% for high hazard umbrella, +7.5% to +15% for high hazard excess, and +10 to +20% for auto.

Commenting on the report, Jon Drummond, head of broking North America at Willis, said that buyers are finding more negotiating power and flexibility in today’s market.

“It’s a moment to reassess strategies, re-engage in broader risk financing strategies, and secure the coverage depth, or other program enhancements, that may have been limited during the hard market cycle,” he said.