Liability Insurance Costs Rose Sharply in Q2
Business owners should prepare for higher premiums as liability and employment practices rates climb.
Updated on Oct. 2, 2026 in Employment
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Commercial insurance costs diverged in the second quarter of 2026, with property rates falling 10.5% while liability and employment practices liability (EPL) premiums saw significant hikes. These shifts signal an end to broad market softening as insurers grapple with rising loss costs.
Why it matters
Rising claim frequency, increased defense costs, and AI-assisted filings are forcing insurers to raise premiums to cover the gap between current pricing and escalating casualty loss costs. Businesses in high-scrutiny states like California and New York face increased pressure on operating margins.
Employment practices liability rates jumped 29% in Q2, while excess casualty pricing rose 8.2% and general liability grew 1.8%. These increases contrast with the property market, which saw a 10.5% median rate reduction during the same period.
The players
Lockton
An independent, privately held insurance brokerage firm that provides commercial risk management and employee benefits services globally.
Chubb
A global provider of property and casualty insurance products with extensive reach in the commercial liability market.
The details
Insurers are aggressively repricing liability coverage to keep pace with US casualty loss costs, which are rising 6 to 7 percent annually for primary coverage and 9.5 to 12 percent for excess layers. The spike in EPL rates is specifically driven by a surge in claim frequency and the impact of AI-assisted legal filings. Meanwhile, workers' compensation results, which showed a 102% accident year combined ratio in 2025, are being used to balance broader portfolio pricing.
Timeline
2025: Workers' compensation medical severity grew 4%.
Q2 2026: Median property and liability rate changes occurred.
March 2026: Lockton identified casualty as a market outlier.
July 2026: Chubb CEO discussed casualty loss cost trends.
2027: Property rate reductions may become harder to secure.
Market Landscape
A quiet 2025 hurricane season previously allowed for competitive property insurance pricing. This trend is now hitting a ceiling as underwriters face sustained pressure to correct for rising casualty loss costs.
Operators should review upcoming renewals with the expectation that liability premiums will rise even if property costs remain stable. Budgeting for higher insurance expense ratios is essential as market conditions narrow through 2027.
The takeaway
The era of broad insurance rate relief is ending as liability claims continue to escalate in cost and complexity. Monitor your firm's loss history and engage with your broker early to clarify how AI-driven filing trends might impact your upcoming renewal premiums.
Further reading
For broader insight into workforce-related costs and compliance trends, visit Employment.
Source note: This article includes information reported by Insurance Business.
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