The relatively calm and buyer-friendly waters of the global insurance market are beginning to show signs of turbulence, signaling an imminent shift that organizations must prepare for before favorable conditions recede. While the market concluded 2025 on a positive note for most insurance buyers, a growing number of underlying pressures, particularly in the casualty sector, suggest this period of stability is drawing to a close. This report examines the divergent trends shaping the industry and outlines the strategic actions required to navigate the more challenging landscape ahead.
A Market in Transition The Current State of Global Insurance
The global insurance landscape in late 2025 was largely characterized by conditions that favored buyers, a trend driven by strong competition among carriers and ample capacity in several key lines. For many organizations, this translated into reduced pricing, expanded coverage limits, and more accommodating terms, creating an environment ripe for securing comprehensive and cost-effective risk transfer solutions.
This buyer-friendly climate was particularly evident in segments such as property, cyber, and Directors and Officers (D&O) liability. These lines benefited from positive underwriting results and a relative lull in major loss activity, allowing insurers to offer more attractive terms. However, this overarching narrative of a soft market masks a more complex and fragmented reality, with different product lines and geographic regions experiencing unique pressures that foreshadow a significant market correction.
Gauging the Markets Pulse Trends and Projections
Diverging Paths Unpacking Key Market Trends
A primary trend defining the current market is the stark contrast between the continued favorable conditions in property and cyber insurance and the escalating pressure within the casualty sector. This divergence is creating a two-tiered market where experiences vary dramatically depending on an organization’s specific risk profile. While some buyers are still enjoying the benefits of a soft market, others are already confronting the early signs of a hardening cycle.
The stability in the property market, for instance, has been sustained by a period of profitable underwriting and a lower frequency of catastrophic events. In contrast, the casualty market is being destabilized by emerging risk factors that are driving up claims costs. One of the most significant new influences is the rapid growth of third-party litigation funding, an industry that actively finances lawsuits in exchange for a portion of the settlement, thereby increasing both the volume and severity of claims filed against insured organizations.
By the Numbers Quantifying the Shift to a Harder Market
The data paints a clear picture of a market at an inflection point. The broader trend of moderating prices is reflected in the slowing pace of US commercial insurance rate increases, which stood at 3.8% in the second quarter of 2025. This figure indicates that while prices are still rising, the momentum has significantly decreased from the sharper hikes seen in previous years, signaling the peak of the soft cycle.
However, statistics from the casualty sector tell a much different story. Over the last decade, US liability claims have surged by a staggering 57%, driven by a more litigious social environment. This trend is amplified by the third-party litigation funding industry, which is now forecasted to exceed $30 billion. This influx of capital is expected to fuel even more aggressive litigation, placing immense pressure on casualty insurers and their clients.
Navigating the Headwinds The Looming Crisis in Casualty Insurance
The greatest threat to overall market stability originates from the US casualty sector, where a confluence of factors is driving loss costs to unsustainable levels. This segment is becoming the epicenter of the market’s impending shift, with its challenges poised to have ripple effects across other lines of insurance and geographies, particularly for any organization with exposure to US legal systems.
At the heart of the issue are the twin forces of social inflation and the proliferation of “nuclear verdicts,” jury awards that far exceed historical norms. These record-breaking verdicts are reshaping the risk landscape, with the median award doubling to $44 million since 2020. This dramatic increase in potential liability is forcing insurers to reassess their risk appetite, leading to significant capacity constraints in critical areas like umbrella and excess liability coverage and making it increasingly difficult for businesses to secure adequate protection.
The Legal Gauntlet Litigations Impact on Risk and Compliance
The evolving legal and claims environment is forcing a fundamental rethink of how organizations approach risk management. In this new reality, simply securing an insurance policy is no longer sufficient; instead, the focus is shifting toward building resilient programs that can withstand the pressures of a more hostile claims landscape. This requires a deeper understanding of policy language, claims protocols, and the capabilities of an insurer’s claims department.
Consequently, the importance of claims performance and advocacy has grown exponentially. Organizations must now partner with brokers and carriers who can demonstrate a proven track record of successfully managing complex claims in a challenging legal environment. Moreover, these escalating litigation trends are creating new challenges for corporate compliance and disclosure, compelling companies with US-exposed risks to be more transparent about their potential liabilities.
The Closing Window What to Expect in the 2026 Insurance Landscape
The consensus among industry leaders is that the window for securing advantageous insurance terms is narrowing rapidly. As macroeconomic pressures intensify and the full impact of rising casualty losses is absorbed by the market, the buyer-friendly conditions of 2025 will give way to a more challenging and fragmented environment. Proactive risk management is no longer a best practice but an essential strategy for survival.
This growing market fragmentation means that a one-size-fits-all approach to insurance procurement is destined to fail. Instead, organizations must work closely with their advisors to tailor solutions that address their unique risk profiles. The forecast for later in 2026 points toward a more varied and volatile market, where pricing and capacity will differ significantly by industry, geography, and line of coverage.
Strategic Imperatives A Call to Action for Insurance Buyers
The core message for organizations is unequivocal: the time to act is now. The current market dynamics offer a limited opportunity to lock in favorable terms, enhance coverage, and fortify risk management strategies before the market hardens. Delaying these crucial decisions could result in higher costs, reduced capacity, and more restrictive terms in the near future.
Businesses should immediately undertake a comprehensive review of their existing insurance programs to identify potential gaps and areas for improvement. This includes strengthening internal claims protocols and ensuring that their coverage is aligned with the emerging risks posed by the current legal environment. This proactive stance, grounded in strategic partnerships and data-driven decision-making, will be critical for effectively navigating the shifting insurance cycle.
