Lockton: New excess casualty facility could signal move away from occurrence policies

By Michael Loney

June 27 - (The Insurer) - The new excess casualty facility from Chubb, Zurich and National Indemnity centered on claims-made coverage could signal the industry “is beginning to steer buyers away from occurrence policies”, Lockton has suggested.

In the latest edition of the Lockton Market Update, the broker said that liability insurance market conditions generally remain predictable for most buyers.

One trend that Lockton highlighted was that carriers are increasingly seeking to limit multi-year losses under occurrence-based policies.

“The recent announcement by Chubb, Zurich and National Indemnity of a new excess casualty facility centered on claims-made and reported coverage could be a sign that the industry is beginning to steer buyers away from occurrence policies, for which coverage can be difficult to price and reserve,” the report said.

The new excess casualty facility was announced in May, and will offer up to $100 million in lead excess casualty insurance capacity on a claims-made basis for large national and multinational companies.

The offering delivers excess umbrella liability coverage underwritten by Chubb and Zurich and supported by National Indemnity Company.

Lockton data shows that median lead umbrella price per million rose 9.6% in the first quarter compared with 10.0% in Q4 2024, while median excess casualty price per million rose 10.8% up from 9.6% in Q4 2024.

“Social inflation remains the preeminent challenge facing liability insurers and buyers today, resulting in accelerated loss rates and higher premiums. Whereas insurers could historically rely on loss experience to estimate reserves and price coverage, past data is no longer a reliable indicator of future potential losses,” the report said.

Liability carriers remain willing to deploy capacity, but are adjusting attachment points, tightening terms and conditions, and managing limits cautiously.

“Adverse reserve development, meanwhile, remains a significant challenge, prompting insurers to alter pricing models and revisit their reserve strategies,” the report said.

Lockton described the recent passage of tort reform in Georgia as a “significant win for insurers and businesses”. It is aiming to curb litigation in a state that has become increasingly troubling.

“The new legislation, along with similar reforms enacted in Florida in 2023, is a welcome sign that states may be waking up to the impact of social inflation on businesses and consumers. Nevertheless, many other ‘judicial hellholes’ remain, and it is unclear whether other states will pass their own reforms,” the report said.

Lockton also said that insurers “are struggling to evaluate, underwrite, and price several emerging and evolving risks, including autonomous vehicles, artificial intelligence, nanotechnologies, 3D printing, and advanced robotics.”

Other concerns include PFAS, asbestos, and assault and battery claims, including for sexual assault and molestation.

“Complicating matters is an evolving regulatory environment under the Trump administration, whose more hands-off approach — exemplified by budget and staff cuts and less enforcement — could prompt more stringent regulation at the state level,” the report said. “Such uncertainty leaves insurers unsure about how future losses may unfold and buyers unclear about how best to present their risk to underwriters.”