International liability: Directionally positive, despite reserving concerns

With year-end renewals well underway, attention turns to what 2026 could hold for international liability markets. In some sectors and geographies, we are seeing a softening of market conditions, though this is inconsistent globally.  

Underwriters report three consecutive years of profit 

Creating favorable conditions for rate moderation 

Lloyds underwriting results for the casualty sector show three years of recent profitability after seven prior years in the red. While it should be noted that Lloyds includes allied long-term classes such as directors and officers (D&O), and financial lines within its definition of casualty, and this is representative of the Lloyds market only, it acts as good barometer for the state of the international liability market.   

Market capacity is stable 

But buyers have more choice  

The global market capacity remained relatively stable in 2025, but as we noted in our April Energy Market Review, this apparent stasis hides some significant movements:

• A number of major insurers have reduced their total line sizes to help spread risk and reduce their exposure to major cat events and/or have elected to purchase less treaty reinsurance
• In contrast, several new managing general agents (MGAs) and Lloyds syndicates are emerging or broadening their appetite into energy liability and in Bermuda. The entry of QBE and Mosaic at the end of 2025 will help to offset previous capacity contractions  
• The continuing development of broker facilities has added additional capacity, enabling hard-to-place risks to be more readily completed  

While total capacity has not changed meaningfully, the choice of market options has broadened.  

All of this is positive news for insureds. But wise insurance buyers are not underestimating the value of a stable panel of trusted insurers that will work constructively with an insured in the event of a claim. 

Global Liability Capacity

Lloyd's annual results for the casualty sector

Reasons to be cheerful 

The rating environment is improving

Healthy capacity and generally positive loss ratios have helped to positively impact conditions and move the international market from a hard to softening rating environment.

Words of caution

1. Europe: Regulations and class actions could have a knock-on effect on liability claims costs In Europe, insurers are increasingly concerned about new legislation making it easier to bring a class action and directives which ease the burden of proof and make it easier to bring a product liability claim. Markets warn that this new class action legislation in Europe will lead to a "material knock-on effect" on liability claims costs. 
2. U.S. exposures in international programs are ‘a very different beast’ Some of the largest losses for international insurers have been on accounts with U.S. exposures. In response, a number or insurers are reducing their lines on programs with significant U.S. exposures and applying differentiated pricing for the U.S.-exposed elements (in the region of 5 to 7.5%) versus the international element (flat or small reductions).

Looking ahead 

With an eye on the past

The liability treaty renewal season in Q1 2026 is expected to be favorable. Despite concerns that the casualty tail will catch up with its head, the emergence of new MGAs, broker facilities and local capacity suggest no immediate change to the current positive rating environment.  

Although buyers have an increasing range of options, both domestically and internationally, future-ready insureds are taking to opportunity to strengthen their programs with long-term relationship markets that will reduce volatility through future insurance cycles, and most importantly, continue to provide the broadest cover and support in the event of a claim. 

Download the full article to find out how to prepare for 2026.

Author

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Mike Newsom Davis

Global Head of Liability, Natural Resources

email Email phone +44 0 203 124 6053

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