Advising Clients in a Rapidly Evolving General Liability Market

• By: Olivia Overman
• July 6, 2026

Businesses are navigating an increasingly complex operating environment amid persistent inflationary pressure, escalating litigation costs, regulatory changes and emerging cyber and environmental exposures. As a result, the commercial general liability insurance market is undergoing a significant transformation, including coverage tightening and expanding exclusions.

Over the past year, the market has seen a shift in capacity levels as “a lot of new capacity and players have arrived,” says Thomas Lynch, senior vice president, Jencap. “The new capacity and players have driven the pricing down in some areas, which means incumbent carriers need to assess renewals differently.”

As a result, “many carriers and managing general agents are focused on niche classes or specific risk profiles,” says Ania Caruso, national casualty president, Risk Placement Services (RPS). “This often requires building layered and quota share solutions, particularly for larger or more complex accounts.”

More challenging risks continue to face high pricing, stricter coverage conditions and restricted capacity, according to USI’s “2026 Commercial Property & Casualty Market Outlook.” These pressures are being fueled by assault and battery exposures in certain regions, along with notable product liability incidents, the report said.

On the other hand, sufficient capacity and moderate competition for new business are returning to retail and to certain manufacturing and service sectors, according to the report.

Further, “one of the most significant shifts over the past year has been the continued segmentation of risk and sustained underwriting discipline, even as pricing has stabilized in certain areas,” Caruso says. “While rate increases have moderated, carriers remain highly focused on terms, conditions and limits deployment, as well as higher self-insured retentions (SIRs), largely in response to continued elevated claims severity driven by social inflation and litigation trends.”

Social inflation—fueled by increased litigation and third-party litigation funding (TPLF)—is one of the most significant challenges for the market, driving claim costs and reserve strengthening across liability lines, especially automobile liability, according to the USI report.

These pressures translate to greater uncertainty and more conservative underwriting across the general liability market, particularly in a broader set of small commercial, middle-market and large risk management accounts, the report said.

“Maintaining underwriting discipline in this moderating rate environment remains critical, but increased underwriting sophistication will be a key differentiator moving forward,” says Tim McDermott, director, property & casualty insurance product management, ERGO NEXT.

“Many insurers have begun integrating technological advancements and artificial intelligence (AI), with capabilities continuing to evolve rapidly,” he says. “Organizations that invest heavily in these technologies to enable more advanced risk segmentation will distinguish themselves from competitors relying on broad class-code appetites and traditional underwriting heuristics.”

“Looking ahead, coverage will continue to be a central theme,” Caruso says. “We are seeing more restrictive terms in the admitted lines, as well as in excess towers, including exclusions and sublimits around areas such as assault and battery, habitability, construction defect and emerging exposures.”

“In addition, the use of manuscript forms is becoming more prevalent, creating greater variability in coverage and requiring deeper technical expertise to evaluate,” she says.

Employers in high-risk industries, such as construction and manufacturing, should anticipate greater coverage restrictions and heightened scrutiny of safety protocols.

For agents operating within the market, “now is an integral time to know the differences in coverages that matter and the tradeoffs in forfeiting certain coverages to save on price,” Lynch says. “With so many players out there, it’s important for agents and brokers to understand the unique subtle differences between each market. It’s important to push for the best pricing but understand all of the exposures to make sure the consumer is protected properly at the time of a claim.”

Similarly, “it is important to have early and transparent conversations around exclusions, limitations and retained risk,” Caruso says. “Analyzing and comparing policy forms, endorsements and manuscript wordings, and partnering closely with wholesale brokers, can help ensure clients fully understand their coverage in place and avoid unanticipated gaps while protecting their balance sheets.”

Going forward, companies with robust risk management and risk mitigation procedures in place may be better positioned to secure more favorable terms.

Olivia Overman is IA content editor.