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Survey Report

Insurance Marketplace Realities 2024 Spring Update – Domestic casualty

May 8, 2024

Loss trends continue to outpace rate in most casualty product lines, leading to combined ratio pressure.
Rate predictions: Domestic casualty
Trend Range
General liability Increase (Purple arrow pointing top right) +2% to +8%
Auto liability Increase (Purple arrow pointing top right) +4% to +10%
Workers compensation Neutral decrease increase, (arrows pointing up and down) -5% to +2%
High hazard/challenged class Increase (Purple arrow pointing top right) +8% to +15%
Low/moderate hazard Increase (Purple arrow pointing top right) +4% to +8%
Excess liability
High hazard/challenged class Increase (Purple arrow pointing top right) +10%+
Low/moderate hazard Increase (Purple arrow pointing top right) +2% to +7%+

Loss trends continue to outpace rate in most casualty product lines, leading to combined ratio pressure. Continued legal system abuse with a lack of tort reform is driving up the frequency of severity losses and legal expenses, impacting carrier financial performance and necessitating insurance premium rate hikes. Trading in a two-tiered market, insureds are experiencing varied market response and program structure augmentation. On a positive note, despite medical and wage inflation, workers compensation maintains favorable rates, indicating effective carrier strategies in mitigating rising liability costs.

This spring edition explores emerging trends in privacy laws, claim management, autonomous vehicles and artificial intelligence. These trends impact various industries and require complex insurance interdependency understanding and contractual risk transfer identification.

Additionally, the NCCI has enacted various changes that could have a material impact on experience modification factors as outlined below. Understanding the impact of these changes and contractual compliance is critical for our insureds to operate their businesses.

Data privacy and Biometric Information Protection Act: How does your liability policy respond?

One high-profile emerging issue is treatment of individuals’ biometric information. Biometric information is often defined as physical identifiers unique to a specific individual, such as fingerprints, voiceprints, hand or facial geometric images, or retina or iris scans. As technology has advanced, various industries and institutions use biometric data more frequently and in novel ways. Biometric information can be used as part of identification and authorization protocols and contribute to important privacy and security checks.

The growing collection of biometric data has led to responses from legislators and regulators, civil litigation, and, of course, coverage implications. Most notably, Illinois passed the Biometric Information Privacy Act (BIPA) in 2008, which has been the source for most biometric court cases to date. In a growing number of cases, courts have issued arguably conflicting decisions as to whether CGL policies cover allegations related to biometric data. For example, in West Bend Mutual Ins. Co. v. Krishna Schaumburg Tan Inc., 2021 IL 125978 (Ill. 2021), the Illinois Supreme Court ruled that a GL insurer owed a duty to defend its insured against a BIPA class action which alleged that the insured disclosed its customers fingerprint to a third-party vendor. And in Citizens Ins. Co. of American et al. v. Thermoflex Waukegan LLC, et al., 595 F. Supp. 3d 677 (N.D. Ill. 2022), the Northern District of Illinois determined that a general liability insurer had a duty to defend its insured against BIPA claims asserted by the insured’s employees, rejecting the insurers’ arguments that three different exclusions precluded coverage, including the employment-related practices exclusion, the recording and distribution of material or information in violation of law exclusion, and the access or disclosure of confidential or personal information exclusion. On the other hand, earlier this year in Citizens Insurance Company of America v. Mullins Food Products, Inc. et al, No. 1:2022cv01334, (N.D. Ill. 2024), a federal judge ruled that the insurer had no duty to defend its insured against claims of BIPA violations based on two exclusions, one which bars cover for recording and distribution of material or information in violation of law, and one which addresses access or disclosure of confidential or personal information.

Unsurprisingly, carriers and Insurance Services Office (ISO) are responding with new underwriting guidelines and revised policy terms in light of this emerging issue. At the end of 2023, ISO released updated language for CGL exclusions CG 21 06 and CG 21 08. Generally speaking, these ISO exclusions address damages arising from access or disclosure of confidential or personal information. The changes include adding the category “biometric information” to the list of confidential or personal material or information encompassed by the exclusion. And significantly, the carve back in CG 21 06 for bodily injury claims was eliminated in the 12 23 version. Separately, in December 2023, ISO introduced endorsement CG 00 69 12 23, which precludes coverage for violation of law addressing data privacy. This endorsement provides that there is no coverage for bodily injury, property damage, or personal and advertising injury “arising directly or indirectly out of any action or omission that violates or is alleged to violate” statutes such as BIPA, the California Consumer Privacy Act, or similar statutes or regulations that address confidential or personal material or information, including biometric information. Certain carriers are crafting their own versions of this new exclusion, which define “biometric material or information” broadly. It is imperative that liability and cyber policies be reviewed and augmented to prevent gaps in coverage.

These issues will continue to evolve as regulators and courts respond to advances in technology and emerging risks. WTW is closely monitoring the topic and is liaising with markets and policyholders to provide guidance in the light of new developments. For more information, contact your WTW broker.

Claims: A casualty update

Claims adjuster turnover

  • Affecting claims in 2023 and into 2024, is the high turnover at third-party administrators and insurance carriers that we continue to observe. Turnover remains at an average of 9% to 11% annually due to retirements and adjusters leaving for higher compensation. TPAs/carriers are increasing recruitment, college graduate programs and training programs. TPAs/carriers, struggling with adjuster retention, are offering a spectrum of hybrid/remote workstyles, with very few TPAs/carriers requiring adjuster to be in the office 100% of the time. The impact of high turnover can adversely affect insured’s claim outcomes and experience.

Artificial intelligence in claims

  • The race is on in the insurance claim industry to adapt AI into the claim process. Most TPAs/carrier claim operations are using AI in various stages of complexity. Some TPAs/carriers are using AI to summarize medical reports, client status reports and other claim documents. Others are using AI to identify potential problematic claims in order to set reserves, recommend plans of action, and even settle nuisance cases. Larger TPAs and insurers, as expected, are able to invest more into AI, leaving smaller TPAs/carriers at a disadvantage. We expect to see more adaptability of AI in the claim process throughout 2024.

Highlights by line of coverage

Workers compensation

  • There was an 85% decrease in COVID claims from 2022 to 2023. Healthcare industry clients, as expected, led all industries in 2023 COVID claims. Due to inflationary pressures and increased WC compensation loss trend, the average paid indemnity claim increased by 11.2% in 2023. This statistic was further impacted as lower frequency of COVID claims (typically low-cost claims for indemnity) lessened in 2023, which inflated the average paid of 2023 indemnity claims. Lost time payments were up approximately 5.7%, and medical payments were up 3.3%.

General liability

  • New claim costs saw an increase of 13% from 2022. The average paid on GL losses increased by over 15% from 2022 to 2023. Claim duration has not experienced a significant change.
  • An emerging trend around the timing of legal representation is that over 50% of new GL claims are already represented by an attorney, and two-thirds are represented by an attorney within two weeks. This trend highlights the need for our clients to resolve as many minor claims as possible within the first two weeks of receipt of the claim.

Auto liability

  • With inflation, there has been an increase in auto repair costs (parts, materials, and labor) with costs rising between 5% and 8% from 2022 to 2023. Just as in general liability, over 50% of third parties are represented by counsel. For both litigated and non-litigated auto liability cases, there have been increases of approximately 10% from 2022 to 2023.

Umbrella/excess liability

  • While the trend line appears stable, the frequency of severity continues to create pressure on rate and program structure for our clients. The average auto liability umbrella attachment point has increased from $1.7 million in Q1 2022 to $2.3 million in Q1 2024. The average lead umbrella limit purchased by our Q1 2024 clients was $10.6 million and less than 17% of Q1 2024 client renewals maintained an umbrella limit of $15 million or greater.

Autonomous vehicles: The question of liability

In the rapidly evolving landscape of autonomous vehicles (AVs) in the U.S., the legal and insurance sectors are grappling with the complex question of liability in incidents involving these highly automated systems. Traditional auto insurance models, based primarily on human error causing accidents, are increasingly inadequate for addressing accidents where decision-making is outsourced to an AI. This has prompted a reevaluation of liability frameworks to accommodate the unique challenges posed by AV technology. The emerging consensus suggests a shift toward a product liability model, wherein manufacturers might bear greater responsibility for incidents. However, this transition raises significant questions regarding the balance of liability between end users, manufacturers and potentially other involved entities, such as software developers or cybersecurity firms. As AVs move closer to widespread adoption, insurance companies are exploring innovative policies that reflect the reduced risk of human error, yet adequately cover the complex interplay of technical malfunctions, software glitches or unforeseen interactions with traditional vehicles.

For end users of autonomous vehicles, the shift in liability and insurance dynamics heralds a nuanced landscape of responsibilities and protections. As the burden of liability potentially moves away from drivers toward manufacturers and other entities, end users may face a changing insurance market with new forms of policies tailored to the specific risks associated with AV technology. These policies might emphasize coverage for cybersecurity threats, software integrity and system failures, rather than traditional driver-centric risks. Additionally, the delineation of liability could become contingent on the level of vehicle autonomy, with implications for user behavior and insurance costs. End users, therefore, stand at a crossroads of legal, ethical and financial considerations, navigating a future where their role in the driving equation is fundamentally transformed. This transition not only impacts individual drivers but also has broader implications for societal norms around vehicle ownership, road safety and urban planning. As we venture further into this new era of transportation, the ongoing dialogue between legal experts, insurers, manufacturers, and consumers will be crucial in shaping a coherent framework that ensures safety, fairness, innovation and responsibility.

The integration of autonomous vehicles into fleets presents a complex web of risks and liabilities, requiring risk managers to adopt a holistic and forward-looking approach, including contractual risk transfer. By focusing on comprehensive risk assessment, clear contractual liabilities, robust insurance coverage, and agile response strategies, organizations can navigate the challenges of AV adoption more effectively. Contractual liability demands careful attention to ensure that responsibilities and risks are clearly delineated among all parties involved, from software vendors to end users. In doing so, risk managers not only protect their organizations but also contribute to the broader goal of safe and responsible AV deployment.

Artificial intelligence impact on personal and advertising injury

In today's business landscape, generative AI’s widespread adoption underscores its potential for enhancing operational efficiencies and capitalizing on lucrative market opportunities. With its ability to assimilate data inputs and generate diverse content formats, generative AI has attracted substantial investments, with the U.S. leading global AI funding at $22.4 billion in 2023. Businesses, including both AI system providers and end users, are held to elevated standards for mitigating AI’s risks, including personal and advertising injury. While AI offers numerous benefits, a prudent approach necessitates a thorough understanding of its inherent perils prior to implementation.

Recent litigation highlights the risks associated with personal and advertising injury from AI applications. Retail giants like Macy’s and Sunglasses Hut face $10 million in damages for wrongful arrest due to AI facial recognition errors. The New York Times’ lawsuit against OpenAI and Microsoft and grievances from individual content creators against companies like Nvidia demonstrate the nuanced complexities of AI-related copyright infringements.

The impact of AI on general liability represents a similar emerging risk to that of biometric privacy litigation that is closely monitored with equal vigilance. Coverage for personal and advertising injury, including copyright infringement, may be limited or excluded from general liability policies. To navigate this landscape effectively, businesses must maintain transparent communication with insurance brokers, demonstrating responsible practices and providing comprehensive underwriting information to secure optimal coverage, potentially requiring additional policies and the dovetailing of coverage among product lines.

Workers compensation experiences modification changes: NCCI, PA and NY

Employers with operations in the NCCI states (36 states and DC) will see a significant change to the NCCI Mod formula components that are used to promulgate their NCCI WC Experience Modification Rating factor during 2024. The revised formula changes will be rolled out on a state-by-state basis throughout 2024.

It is extremely important to be aware of these changes to the NCCI Mod formula components as they will impact how employers’ 2024 NCCI Effective Date Mod is calculated and the resulting impact on their WC premium and state WC assessments and surcharges that are based on modified standard premium. Since the WC Mod is used at times as a “safety” indicator in some industries, these changes could also impact potential job bids.

The following summary outlines the NCCI Mod formula components that are changing, NCCI rationale for the change, NCCI’s view on the impacts and NCCI’s implementation process.

Summary of NCCI’s States Mod changes for 2024

2024 NCCI changes effective Januar 1, 2024 (item filing E-1409 and impacts)
What is changing? NCCI’s rationale
Split point (determines primary and excess)
New statre specific split points as opposed to national level (historically $18,500)
NCCI feels the already state-specific rates will better reconcile with state-specific split points and improved accuracy in determining exp mods
State per claim accident limitation (SAL)
Equals the 95th percentile of lost-time claims by state and generally decrease in magnitude
The new SALs make experience rating modifications less sensitive to large claims without sacrificing accuracy. This change also promoted year-to-year stability
Credibility parameters
Recalibrated with more recently available data
NCCI uses credibility parameters (around payroll size) in the calculation of the weighting values and ballast values in the experience modification calculation. NCCI updated to improve equity within the experience rating plan
G value (Measure of average severity)
Adjusted for SAL and 70% reduction of medical ooss only claims
NCCI believes this will provide more consistency
Discount ratio (used in calculation of expected losses)
Will no longer differ for class codes in the same hazard classes
NCCI thinks this simplification will create more stability in D-Ratios and expected loss costs year over year


  • No statewide premium impact is anticipated from the changes proposed in this item. The overall average experience rating modification in each state is not expected to be impacted by these changes.
  • Impacts to experience rating modification at the individual employer level will vary and may be offset by changes in loss experience and routine updates to rating values. Experience rating modifications are expected to change by less than +/-5% for most employers.


  • This item will become effective for experience rating modifications with rating effective dates on and after each state’s anticipated loss cost/rate filing effective on and after November 1, 2023.
  • For example, this item will become effective for experience rating modifications with rating effective dates on and after January 1, 2024, for states with loss cost/rate filings that have an anticipated January 1, 2024 effective date. Similary, this item will become effective for experience rating modifications with rating effective dates on and after July 1, 2024, for states with loss cost/rate filings that have an anticipated July 1, 2024 effective date.

Employers with operations in Pennsylvania (PA) will also see a significant change to the Pennsylvania Compensation Rating Bureau’s (PCRB) Mod formula components that are used to promulgate their PA WC Experience Modification Rating factor. The revised PA Mod component changes will take effect for all PA WC policies which renew on or after April 1, 2024.

The change to a variable split point from the single split (at $42,500) in addition to the other changes may cause a PA employer to see either an increase or decrease in their PA Mod depending on their poor or good PA loss experience.

The following summary outlines the PCRB Mod formula components that are changing.

Summary of PA Mod changes for April 1, 2024

Summary of PA Mod changes for April 1, 2024
  Current Proposed
Plan Single split point Variable split point
Formula Ap x C + E x C x L + E(1.000 – C)/E
Ap: Actual primary loss, E: Expected loss, C: Credibility, L: Limitation charge
Eligibility $10,000 $5,000
Credibility 0.283 – 0.938 0.690 – 0.974
Expected loss range 10,706 – 5,806,852 5,000 – 4,338,871
Split points Single (1): $42,500 Variable (88): $10,000 - $300,000
Med-only claims 100% 100%
Capping % +-25% Max mod and 40% swing limit (two year transition period*)
Secondary capping Yes (rule #2) Elimiate (after transition period*)

*Transition period: The new max mod will apply. However, the current capping rules (+/-25% swing limits and secondary capping) will also apply for a two year period to ensure mod stability during the transition to the new plan.

Summary of NY Mod changes

New York stopped participating in NCCI’s Interstate Experience rating effective 10/1/2022. NCCI Experience Rating Modifications with an effective date of 10/1/2022 and will exclude New York (NY) WC experience.

Please contact us if you have seen a rise in your NY Mod since 10/1/2022, and we can tell you why it increased. We can also help you to develop a NY Experience Mod reduction plan to get your NY Mod under control.

The following details the new NY Mod formula components:

New mod formula


Ap: Actual primary losses, Ee: Expected excess losses, E: Expected losses

Variable split point

A “split point” is a dollar value that divides losses for each claim into primary and excess components. Futher, split points vary by risk and are a function of each risk’s expected losses in the experience period. Split points can vary from as little as $1,000 for the smallest risks to as high as $170,000 for the largest risks. For example, using the abbreviated sample to the right, a risk with $2,700 in expected losses will be assigned a split point of $1,500 where as a risk with $90,000 of expected losses will be assigned a split point of $20,000. Under the new formula, only the primary components of actual losses is considered in the mod determination.

Sample variable split point table

Sample variable split point table
Expected loss ranges Split point
From To  
$0 $2,206 $1000
$2,207 $2,892 $1,500
$84,072 $88,814 $19,500
$88,815 $93,724 $20,000
$3,951,100 $4,256,459 $160,000
$4,256,460 And above $170,000


D-ratios are the ratios of primary losses to expected losses for each class and risk size. By way of example, the abbreviated sample table contains D-ratios for use with class code 2041 (candy, chocolate or cocoa manufacturing).

Sample class 2024 D-ratio table

Sample class 2024 D-ratio table
Split point D-ratio
$1,000 0.046
$1,500 0.063
$19,500 0.383
$20,000 0.389
$160,000 0.984
$170,000 0.995


  • We have seen the expected loss rates (ELRs) across many of the WC class codes, particularly for the construction industry, decrease since 2020. For example, WC class code 5506 — street or road construction — paving or repaving and drivers.
  • The expected loss rate for 5506 in Texas was $1.57 in 2020 and it has dropped to $0.99 in 2024. This is a decrease of $0.58 per $100 of WC payroll or a 37% overall rate decrease.
  • The expected loss rate impacts expected losses, which is in the denominator or the bottom number of NCCI’s Mod formula (actuals/expected). If the WC loss and payroll amounts in NCCI’s Mod calculation remain similar from one year to the next, a NCCI Mod increase can still occur due to a reduction in the new expected loss rates. The NCCI Mod would increase due to the less favorable ratio of actual losses to the new lower expected losses.
  • The following are some of the reasons why a NCCI Experience Mod may increase:
    • An overall increase in WC losses
    • A change in expected loss rates (ELRs)
    • A change in job classifications, or the amount of WC payroll per classification
    • A decrease in WC payroll
    • A change in the primary/excess mix of WC losses
    • A change in the amount of medical only claims
    • An increase in the state loss limit
    • A change in the weighting table
    • A change in the ballast table
  • There are a lot of moving parts in the NCCI ERM formula:
  • NCCI ERM formula

Need help in understanding your WC Experience Mod?

We can help you to understand why your Experience Mod increased and help you to develop an Experience Mod reduction plan to get your Mod under control.


Article/reference links


Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).


Casualty Leader, North America, WTW

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