We continue to see ongoing trends showing increasing severity across most commercial lines insurance, but there are actions you can take to mitigate these pressures on your bottom line.

Commercial insurance markets are showing a clear pattern of rising claim severity even as frequency moderates. This increases pressure on pricing and underwriting requirements that many of you have seen. Commercial liability losses have more than doubled over the past decade, while property claim volume declined. Property claims have declined in number, but catastrophic losses are still volatile. Auto insurance remains challenging with increasing frequency and severity.

Claim Severity Continues to Rise Even as Frequency Moderates

Across property, casualty, and liability lines, insurers are reporting higher average claim severity, meaning each claim is costing more to settle. These claims are driven by inflation in labor and material costs, litigation trends, medical cost inflation, social inflation, and nuclear verdicts. Premiums and reserves are adjusting accordingly.

Here are some examples from The Insurer from Reuters (Moody’s Cooper: Litigation-linked claims inflation will continue to drive reserve volatility | The Insurer, September 6, 2005):

  • Losses have more than doubled over the last decade across commercial liability lines
  • General liability losses increased to about $45 billion in 2024 from $18 billion in 2015, far exceeding real economic growth and inflation during that period

Why it matters:

  • Higher severity directly impacts loss ratios
  • Drives underwriting discipline and pricing adjustments, increasing rates, and changing terms and conditions

 

Property Claim Volumes Down, But Catastrophe Exposure Still Volatile

Property claim activity continues to decline in volume (including lower non-catastrophe loss activity) in some reporting periods, but severe storms and climate risks remain volatile locally.

For example, Insurance Business analyzes a Verisk report for the first quarter of 2025 (Property insurance claim volume declines to five-year low in Q1 2025: Verisk | Insurance Business, June 23, 2025):

“… total property claim volume dropped by approximately 7% compared to the same period in 2024. The decline was largely attributed to a reduction in non-catastrophe claims. Catastrophe-related claims remained consistent with levels observed in recent quarters.

While overall frequency fell, the severity of reported claims increased sharply, particularly in California. The state’s Palisades and Eaton wildfires generated an estimated 48,000 claims totaling close to $10 billion.”

This trend continued through 2025, as described by Risk and Insurance while analyzing further Verisk data (Property Insurance Faces Claims Volume vs. Severity Paradox in Q3 2025 – Risk & Insurance : Risk & Insurance, December 5, 2025). “Third quarter records lowest claim volume in five years while projected severity could reach historic highs as claims mature.”

Why it matters:

  • Preparedness for extreme weather remains essential
  • Businesses benefit from updated hazard mitigation planning

 

Commercial Auto Claims Trends show Frequency and Severity Both High

Commercial auto remains a persistent trouble spot, with many carriers reporting elevated frequency and severity trends and ongoing pressure from repair costs, shortage of experienced drivers, and litigation outcomes. Risk & Insurance reports (Commercial Auto Insurance Losses Hit $4.9 Billion as Legal System Abuse Drives Severity Beyond Pricing Gains – Risk & Insurance : Risk & Insurance, September 22, 2025):

“The commercial auto insurance line posted a $4.9 billion underwriting loss in 2024, marking the 14th consecutive year of losses as social inflation drives claim severity increases averaging 8% annually—more than double the 3% economic inflation rate—according to AM Best’s U.S. Property Casualty Commercial Auto Market Review.”

Unlike other commercial lines that have seen increased severity but decreased frequency, automobile bodily injury claim frequency has also steadily increased by 11% in the last few years, as reported by CCC Intelligent Solutions Inc. (What’s Really Driving the Rise in Bodily Injury Claim Frequency? A Closer Look at an Unexpected Trend | CCCIS, January 22, 2026).

Why it matters:

  • Fleet clients face higher premiums and more stringent underwriting
  • Greater demand for telematics/driver safety programs