Conditions across most lines remain broadly favorable, according to Lockton's October 2026 market update, driven by strong insurer earnings, abundant capacity, and a softening reinsurance market. But the rate picture is fragmenting, several favorable lines are beginning to decelerate, and in liability, pricing is falling short of where loss costs are heading.
Property led the softening in the second quarter. Median property rates fell 10.5%, according to Lockton's benchmarking data. That pace may not hold into 2027, as insurers are increasingly communicating that further reductions will be harder to secure. The driver of current softness is largely competitive reinsurance, itself supported by a quiet 2025 hurricane season and no US landfalls. A major US landfall in the final months of the Atlantic season could shift both retail and reinsurance market expectations quickly.
Nowhere is the fragmentation more visible than in liability. Lead umbrella median pricing climbed 6.2% in Q2 and excess casualty 8.2%, according to Lockton data. General liability, by contrast, rose just 1.8%. Those figures are medians. Results for specific risks, industries, and attachment points varied considerably.
The gap between current pricing and underlying loss costs is the central concern. US casualty loss costs are rising at 6 to 7 percent annually for primary and 9.5 to 12 percent for excess, Chubb CEO Evan Greenberg said on the company's Q2 earnings call in July. He added there is "zero evidence across the industry that loss costs have abated." At those rates, the gap between where pricing sits and where it needs to be can close faster than most renewal cycles allow.
Competition has increased in middle and upper excess layers, which can work in buyers' favor on program structure and terms. Lead umbrella capacity and pricing, however, remain under greater pressure. Buyers expecting relief higher up the tower to flow down to the lead layer should not count on that. Lockton's March 2026 market analysis flagged casualty as the main outlier even then, with reinsurers closely monitoring reserve adequacy and systemic liability trends.
Employment practices liability (EPL) is the sharpest hardening in the executive risk book. Median EPL rates rose 29% in Q2, according to Lockton, driven by rising claim frequency and severity, higher defense costs, and growing AI-assisted plaintiff filings. Carriers are also tightening on retentions and becoming less flexible on defense counsel selection.
The line is becoming jurisdiction-specific in its pressure points. California, New York, New Jersey, and Washington are the most scrutinized states, while retail, healthcare, and hospitality are the most exposed sectors. Unlike the broader executive risk market, where D&O remains broadly stable and fiduciary flat, EPL is operating under different dynamics and warrants a separate placement conversation.
Workers' compensation reported a 2025 calendar year combined ratio of 91%, the 12th consecutive year of underwriting profitability, according to the National Council on Compensation Insurance (NCCI). The 2025 accident year combined ratio, however, was 102%. That divergence reflects favorable development from older years masking less room in more recent business. Medical severity grew 4% in 2025, and preliminary medical cost per claim increased 6%.
The favorable combined ratio still provides negotiating room across broader casualty placements. But using workers' compensation results to offset liability pricing or retentions in other lines ties programs together in ways that reduce flexibility at future renewals.
Lockton's broader assessment is that conditions create room to do more than lock in a price reduction. Buyers who use the current environment to revisit program structure, improve coverage terms, and evaluate attachment points are better positioned when conditions narrow, as Lockton expects they will.
