While we had hoped for a softening of the insurance marketplace, the commercial insurance marketplace remains firm overall, though the good news is that renewal trends suggest it is gradually moving off the peak conditions of recent years. However, we expect portions of the insurance market to remain challenging in 2026—particularly Liability, Umbrella, and Directors & Officers coverage. Why?
- Social Inflation & Changing Jury Behavior – Social inflation refers to the rise in insurance claim costs driven not by economic factors like medical or wage inflation, but by changes in societal attitudes, legal system behavior, and litigation trends. In other words, it’s the non-economic forces that make liability claims more frequent, more expensive, and harder to predict. It continues to be the single biggest driver of increasing liability costs. This includes:
-
- Larger Jury Awards (“Nuclear Verdicts”) – Jury awards of $10M+ have surged. While the number of nuclear verdicts for 2025 is not yet known, there were 135 nuclear verdicts in 2024 totaling $31.3B, and it is expected that the figure is higher for 2025.
- Shift in Juror Attitudes – Jurors show increased sympathy toward plaintiffs and stronger anti-corporate bias, recommending large awards even against small businesses.
- Litigation as a Social Norm – Fewer Americans believe there are “too many lawsuits,” indicating shifting cultural norms that encourage litigation.
- Third Party Litigation Funding (TPLF) – This is where outside investors finance lawsuits in exchange for a portion of any award – they are typically undisclosed to all parties in a case and the courts, and are linked to prolonged litigation, increased trial and settlement demands, and larger verdicts. It also encourages the filing of new claims. In 2025, $35.8 billion in direct annual economic losses were tied to third-party litigation funding. That number will probably only go up.
I would suggest budgeting a 10% increase at a minimum to be safe.
As always, we will continue advocating for our clients, seeking out better terms, and communicating clearly about what to expect so there are no surprises.
