Liability insurance buyers saw flat to high-single-digit increases in most coverage layers during mid-year renewals, as insurers offered more capacity but remained wary of some volatile risks.

Retentions and attachment points remained elevated, but rates in some excess layers came off previous highs, experts said.

Insurers remain concerned about accelerating court awards and settlements, particularly for auto liability risks, and are increasingly excluding emerging liabilities such as so-called forever chemicals and biometric liability risks, they said.

General liability renewals trended around flat, said Stephen Hackenburg, New York-based U.S. national casualty practice leader at Aon PLC’s commercial risk solutions division.

“The exception is auto. Even though most of our clients in the primary auto space take very significant retentions, we are seeing rate pushed into mid-single digits,” he said.

Court awards and settlements in auto liability cases continue to escalate, Mr. Hackenburg said.

“Almost every month I see a loss in the $50 million range, and they are not slowing down,” he said.

Renewals were largely stable, compared with recent years, with mid-excess layers, such as $15 million excess of $10 million, experiencing the most competition, said Jessica Cullen, New York-based managing director, casualty practice, at Arthur J. Gallagher & Co.

“Between 2018 and 2021, the rates went up so substantially that there’s enough meat on the bone where people now are saying, ‘You know what, I’m willing to provide relief to get that layer,’” she said.

Decreases on those layers vary by risk class, with most falling in the 5% to 7% range, but in some cases prices have fallen by double-digit percentages, Ms. Cullen said.

Rates for lead umbrella layers, which are increasingly being penetrated by losses, outpaced rate hikes across the remainder of the excess towers, which averaged single-digit increases, Mr. Hackenburg said.

Capacity increases

Primary general liability limits have increased, said Diana Johnson, Pittsburgh-based large casualty technical director at Zurich North America.

“One of the trends that we have seen over the last couple of years … is an increase in the primary GL limits due to the attachment point requirements for umbrella carriers,” she said.

Zurich considers the risk characteristics of individual policyholders, emerging trends, loss experience and other factors when deciding whether to offer increased limits, Ms. Johnson said.

Attachment points for excess programs remain at elevated levels, and large policyholders are increasingly purchasing alternative risk structured coverages, which return premium if losses don’t materialize, in buffer layers between primary and excess layers, Mr. Hackenburg said.

New capacity entering the market is usually concentrated in specialty areas, but existing insurers are offering more capacity in some areas where they are satisfied with the rates, Ms. Cullen said.

Where excess insurers offer additional capacity, they usually “ventilate” their exposures by covering risks at various points in a coverage tower rather than offering a single block of capacity, Mr. Hackenburg said.

Total limits available have not returned to the $1 billion levels that were available in 2019, he said.

“But if you were at $550 million to $600 million and you were forced into the $400 million range or so in the hard market, you're getting back to those levels,” Mr. Hackenburg said.

Emerging liabilities

Potential health concerns from exposure to forever chemicals or PFAS, which are found in a wide range of household and industrial products, have led underwriters to increasingly exclude the risk in general liability policies over the past several years. PFAS is an abbreviation for perfluoroalkyl and polyfluoroalkyl substances.

While some insurers still don’t include PFAS exclusions for lower-risk accounts, they are increasingly barring coverage, Ms. Cullen said.

Zurich has not implemented a blanket exclusion for PFAS but looks at the controls that policyholders put in place, Ms. Johnson said.

“Have they taken steps to remove PFAS from their operations, from their products? If they have firefighting foam on their premises, are they looking at replacements? How are they controlling it? All of those things, we take into consideration when we underwrite,” she said.

Insurers are also increasingly concerned about biometric privacy laws that have been passed in various states, including California, Colorado, Connecticut, Illinois, Utah and Virginia. Several lawsuits have been filed alleging companies violated the laws by using consumers’ biometric data without consent.

“It’s been interesting to see the different language that different carriers are utilizing in the definition of biometric,” Ms. Cullen said. “Typically, when we think biometric, we think your DNA, your thumbprint, your facial recognition, retina scan, but I’ve even seen people talk about your voice or your hand signature.”

Insurers are prepared to offer coverage against biometric exposures in specialty policies but are looking to exclude them from general liability policies, Mr. Hackenberg said.