Litigation-driven claim costs are running well ahead of general economic inflation across four US liability lines, compressing the gap between what insurers are booking and what renewal pricing can recover. The Insurance Information Institute (Triple-I), based in Malvern, Pa., published research on November 12, 2026, finding that US auto and general liability insurers absorbed between $274.8 billion and $337 billion in excess losses and related expenses from 2016 through 2025 that cannot be explained by general inflation alone – representing 16% to 19.6% of total booked losses across all four lines studied.
The driver, Triple-I says, is legal system abuse – a term the industry uses to describe litigation tactics, third-party litigation funding (arrangements in which outside investors finance lawsuits in exchange for a share of settlements), and outsized jury awards that push payouts beyond their underlying value. Across all four lines studied, claim severity, not claim frequency, is the principal cost driver.
“Legal system abuse is contributing to liability costs that are rising well beyond general inflation, putting additional pressure on insurance affordability for consumers and businesses,” said Sean Kevelighan, CEO of Triple-I.
Read more: Liability keeps buyers on edge as commercial market softens
The findings land alongside renewal data brokers are already navigating. According to Lockton’s July 2026 Market Update, commercial auto buyers are generally renewing up 8% to 12%, making it the most persistently challenged line in the casualty market. Rates for general liability rose 2.6% on average in the first quarter of 2026, while median lead umbrella pricing per million rose 8.0% and median excess casualty pricing per million rose 7.6%.
Matthew Hannon, national casualty practice leader for Aon in North America, described the pressure as a systemic shift rather than a cyclical one. “Severe single-plaintiff liability events can now affect organizations of every size and sector. That shift is systemic, and it’s reshaping how all buyers need to think about casualty risk,” Hannon wrote in Aon’s 2026 P&C Outlook.
Greg Spore, director of market intelligence at Lockton’s US Market Strategy & Engagement Group, wrote in the same July 2026 update that early engagement, strong data, and disciplined program design now carry greater weight in securing favorable terms than in prior renewal cycles. Lockton’s guidance for lines where severity is rising fastest – product liability, commercial auto, and umbrella – points to reviewing deductibles, attachment points, and overall program structure. For clients with litigation-heavy exposures, limits set before the severity acceleration may no longer match realistic exposure.
“Without meaningful moderation in claim severity, insurers will continue to face rising cost pressures, with implications for insurance affordability and availability for businesses and consumers,” Kevelighan said.
The sharpest data point in the Triple-I research sits in product liability occurrence. Claim severity has grown more than fivefold since 2016, rising at an annual rate of 22.8%. In 2025 alone, excess costs above what general economic trends predict accounted for approximately 51.5% of all booked losses in that line. Additional costs in the segment came to $5.7 billion to $5.9 billion over the full study period, representing 32.3% to 33.6% of booked losses.
In commercial auto liability, additional costs totaled between $60.8 billion and $86 billion – 24% to 34% of booked losses – while claim severity grew at a compound annual rate of 8.2% from 2016 through 2025, even as claim frequency held below pre-pandemic levels. Individual claims are becoming significantly more expensive without a corresponding rise in volume.
Personal auto liability shows a different pattern. Bodily injury claim severity is now 62.4% above pre-pandemic levels, with additional losses estimated between $101.6 billion and $120.1 billion, or 9.1% to 10.8% of booked losses.
The other liability occurrence category – covering general liability and premises-related claims – recorded the largest dollar impact among the four lines, with additional costs of $106.7 billion to $125 billion, or 31.4% to 36.8% of booked losses. Losses in that segment now sit 70.5% above 2017 levels.
Read more: US tort costs hit $580bn as casualty market feels the strain
The legislative response to legal system abuse has gathered momentum since 2025, though insurers and brokers are not pricing in near-term relief.
Georgia, Mississippi, and Tennessee have each required disclosure of third-party litigation funding arrangements since the start of 2025. Georgia’s broader tort reform package, signed in April 2025, also narrowed negligent security liability and tightened how damages are calculated and presented at trial. South Carolina and Louisiana enacted comparable reforms in May 2025. In June 2026, North Carolina became the first state to broadly prohibit third-party litigation funding in its court system. New York introduced a modified comparative fault standard for motor vehicle cases in its FY2027 budget.
At the federal level, Senate Judiciary Committee chairman Chuck Grassley introduced the Litigation Funding Transparency Act of 2026 on February 11, alongside Senators Thom Tillis, John Kennedy, and John Cornyn. The bill, which would require disclosure of outside investors in federal class actions and bar funders from directing litigation strategy, was referred to the Senate Committee on the Judiciary on February 11, 2026, and remains in committee.
Lockton has cautioned that buyers should not expect those reforms to quickly reverse pricing, attachment-point, or capacity pressures. Social inflation, large verdicts, and adverse loss development remain key considerations in commercial casualty placements despite the broader market softening, regardless of state-level progress.
The Triple-I study draws on National Association of Insurance Commissioners (NAIC) Schedule P data, building on methodology from The Impact of Increasing Inflation on Liability Insurance: 2015-2024, published jointly with the Casualty Actuarial Society (CAS) on October 30, 2025.
