What to expect in the 2025 casualty insurance market

Multiple factors could impact the casualty insurance market in 2025, but overall, there should not be significant changes, according to Bill Chepulis, head of large casualty, US accounts at Zurich North America. During a recent webinar sponsored by Zywave, Chepulis said, "2025 will look and feel a lot like 2024…Workers' comp and excess will look the same."

Chepulis also shared that severity has basically doubled since the beginning of COVID. While policyholders drove fewer miles during the pandemic, they have returned to the same level of activity and miles driven as before the pandemic, but now it is costing carriers twice as much to provide the same level of insurance they did previously and covid has accelerated the risk landscape.

Technology adoption has been fast-tracked over the last five years as the industry and other businesses have embraced it. "People are used to the virtual environment," he said, "however, there are new exposures from influencers and streaming platforms, and they all fall into general liability. How does the industry respond?"

Mike Vitulli, national casualty practice leader at Risk Strategies said that the casualty market has changed and one of the key factors is the impact of the plaintiff's bar on jury trials and how they paint insurers in a negative light. Juries that decide on large awards don't always understand the long-term impacts of those decisions and both Vitulli and Chepulis said that more education is needed in this area for jurors.

Vitulli also indicated that sometimes the casualty market can be hard to navigate because of the size, market and jurisdiction issues involved. He shared that brokers, "need to understand how your risks align and see if you can place them together."

There have been some challenges in writing coverage in smaller markets, but companies with large deductible programs are able to find underwriting. Vitulli reminded the audience that when it comes to coverage, "Insurance companies are in business to make money and sometimes our clients forget that. Insurers can write business or choose to put their money elsewhere. "

Factors to watch in 2025
Different industries have different exposures and brokers and their clients can take several steps to reduce their risks. "Make sure the product fits the exposure," advised Chepulis. "Know the frequency of and primary types of losses, as well as the excess losses and find the right product that fits. Know you risks and exposures." He explained that some of the risks in the hospitality industry can include sexual abuse, human trafficking and human transport. "You need to articulate what you're doing and manage and differentiate those risks." He recommended against choosing the cheapest option from a coverage and servicing perspective. "What you save up front will cost you in the end," he added.

Vitulli recommended buying coverage from a trusted partner and using claims data to explain risks to a customer and what coverage they should buy. "Always offer higher limits to your customers from an E&O perspective," he advised because some claims can be higher than expected, leaving a customer exposed if they have insufficient coverage.

He also suggested that brokers negotiate an entire program of coverage for clients because it can make it easier to manage the premiums for them. "The issue," he said, "is how can the industry come together to make the customers less risk exposed?"

He cautioned that claims that were $250,000 are now $3 million and said it was important for the industry to educate clients that $1 million in coverage doesn't buy what it used to buy. "They need to understand the potential for claims and what it means. Insurers need to explain what claims are going to cost in real dollars."

Zywave's vice president of client solutions, Jim Blinn, concurred. "The concern is the limit that you're buying today, has to pay for losses five years from now. We need to think proactively about the limits. Losses will not decrease in the future."