Tools + Intel.

For years, excess liability discussions largely centered on construction. High-hazard operations, complex contractual relationships, and severe workplace injuries made contractors some of the largest purchasers of excess and umbrella insurance.

That is no longer the case. Today, catastrophic liability claims are emerging across a much broader range of industries. Hospitality businesses are facing multi-million-dollar assault and security claims. Apartment owners are seeing larger premises liability verdicts. Manufacturers and distributors are confronting increasingly complex product liability litigation. Across virtually every industry, social inflation, escalating litigation costs, third-party litigation funding, and a growing number of nuclear verdicts are driving higher claim severity and reshaping the excess liability landscape.¹

EXCESS LIABILITY HAS CHANGED

The conversation around excess liability has shifted from frequency to severity.

While many insureds have not experienced a dramatic increase in liability claims, the financial impact of those that do has grown substantially.

Several forces are contributing to this trend. Perhaps the most discussed is social inflation, the increase in insurance claim costs beyond normal economic inflation due to changing societal attitudes towards corporate responsibility, expanding theories of liability, and growing jury sympathy for plaintiffs.²

At the same time, nuclear verdicts, generally defined as jury awards exceeding $10 million, continue to become more common across a variety of industries. Nuclear verdicts reached a record $31 billion in total awards in 2024, with the median nuclear verdict climbing to $51 million.³

Another significant factor is the expanding role of third-party litigation funding, where outside investors finance lawsuits in exchange for a portion of any recovery. Industry analysts estimate the global litigation finance market exceeded $20 billion as of 2025 and is projected to reach over $51 billion by the end of 2036.⁴

That said, growth in the U.S. commercial litigation funding market has not been linear. New capital commitments to litigation funding deals declined for two consecutive years before rebounding approximately 23% in 2025, and the market has not yet returned to an expansionary footing.⁸ Together, these developments are creating a liability environment where even routine incidents have the potential to develop into catastrophic losses.

It is worth noting that pricing trends are moderating even as severity trends persist. According to CRC’s REDY Index, average excess and umbrella rate increases decelerated to a range of 6.3% to 10.7% in the first half of 2026, down from 12% to 16% during the same period a year earlier, as expanded capacity and heightened competition among carriers have tempered pricing.⁹ This moderation in rate, however, has not been mirrored by a reduction in claim severity. Social inflation, nuclear verdicts, and litigation funding continue to push claim costs higher, meaning the underlying case for adequate excess liability limits remains as strong as ever.

COMMERCIAL REAL ESTATE: MORE THAN SLIP-AND-FALL CLAIMS

Commercial real estate owners face a wide variety of liability exposures that extend well beyond basic premises liability. Apartment complexes, mixed-use developments, office buildings, shopping centers, and industrial properties all pose unique risks that can lead to significant claims.

Premises liability remains one of the most common concerns, particularly involving falls, inadequate maintenance, poor lighting, or unsafe property conditions. However, many of today’s largest claims stem from allegations that owners failed to provide adequate security. Negligent security lawsuits involving assaults, shootings, robberies, or other criminal acts continue to produce substantial verdicts, particularly when plaintiffs argue property owners failed to address known risks or prior incidents.⁵

Contractor management also presents increasing exposure. Property owners often rely on numerous third-party contractors for maintenance, construction, landscaping, security, and building operations. Poor contractual risk transfer or inadequate insurance requirements can create unexpected liability.

Habitational properties add another layer of complexity through exposures involving mold, life safety systems, balconies, elevators, pools, playgrounds, and tenant injuries. Underwriters increasingly look beyond occupancy and square footage, evaluating property management practices, maintenance programs, security measures, and contractual controls when assessing excess liability needs. Restaurants, hotels, entertainment venues, and event facilities welcome thousands of guests each year. With that volume comes increased potential liability.

One of the largest concerns remains assault and battery exposure. Incidents involving fights, shootings, inadequate security, or negligent hiring can quickly escalate into multimillion-dollar claims, particularly when plaintiffs allege management ignored warning signs or failed to implement appropriate security measures. Liquor liability continues to present significant challenges as well. Overservice allegations, impaired driving accidents, and dram shop litigation have increased the severity of hospitality losses in many jurisdictions.⁶ Crowd management has also become a greater underwriting focus. Special events, concerts, festivals, sporting venues, and nightlife establishments face additional challenges related to crowd control, emergency response planning, evacuation procedures, and staffing levels.

Well-managed hospitality accounts typically demonstrate:

• Formal security planning
• Employee training programs
• Written alcohol service protocols
• Incident documentation procedures
• Vendor oversight
• Emergency response planning

These operational controls often distinguish more desirable risks from those requiring significantly higher excess liability planning.

MANUFACTURERS AND DISTRIBUTORS FACE EXPANDING PRODUCT LIABILITY RISKS

Product liability has become increasingly complex as supply chains expand globally and products incorporate more sophisticated technology. Manufacturers face exposure not only from alleged design or manufacturing defects but also from inadequate warnings, labeling issues, quality control failures, and changing consumer expectations. Distributors can also be drawn into litigation, even when they did not manufacture the product.

Large recalls further compound financial exposure. More than 3,200 U.S. product recalls were announced in 2025 across key industries, underscoring the scale of product risk facing businesses today.⁷ Supply chain disruptions have introduced additional underwriting concerns. Component substitutions, new suppliers, changing manufacturing locations, and quality assurance challenges may all affect product performance and increase liability exposure.

Underwriters increasingly evaluate:

• Supplier management
• Product testing
• Quality control procedures
• Recall planning
• Documentation practices
• Regulatory compliance

Strong operational controls can significantly improve an account’s excess liability profile.

HELPING WHOLESALE BROKERS RECOGNIZE WHEN EXCESS LIABILITY NEEDS HAVE CHANGED

One of the most valuable roles brokers can play is recognizing when a client’s liability profile has evolved. Many businesses outgrow the insurance program they originally purchased, even though their liability limits often remain unchanged.

There is no single trigger that determines when additional excess liability becomes necessary. Instead, brokers should evaluate how a client’s operations, growth, and overall risk profile have changed over time. Rapid expansion, entering new markets, signing larger contracts, increasing customer traffic, introducing new products or services, expanding real estate portfolios, or taking on more subcontractors can all signify increased liability exposure. Likewise, new contractual insurance requirements or larger customer expectations may warrant a fresh review of liability limits.

Beyond operational growth, today’s legal environment should also influence these conversations. Larger verdicts are no longer limited to Fortune 500 companies or traditionally high-hazard industries. As social inflation, litigation funding, and nuclear verdicts continue to drive claim severity higher, businesses across a wide range of sectors are becoming increasingly vulnerable to catastrophic losses.

Construction remains an important buyer of excess liability coverage, but it is far from the only industry where higher limits should be considered. Hospitality, commercial real estate, manufacturing, distribution, healthcare, transportation, retail, and recreational businesses all face evolving liability exposures that may not be reflected in legacy insurance programs. As litigation trends continue to shift and jury awards grow larger, many organizations that once viewed excess liability as optional are recognizing it as an essential component of long-term financial protection.

Rather than waiting for a major operational change or contractual requirement, discussions of excess liability should become routine in the renewal process. Proactively reassessing liability limits allows brokers to identify coverage gaps before a catastrophic claim exposes them, helping clients build insurance programs that evolve alongside their businesses.

BOTTOM LINE

Excess liability is no longer just a construction conversation. Rising claim severity, social inflation, nuclear verdicts, litigation funding, and increasingly complex business operations are creating catastrophic liability exposures across hospitality, commercial real estate, manufacturing, distribution, and many other industries. As these risks evolve, retail agents are increasingly turning to wholesale partners for access to specialized markets, additional capacity, and customized solutions for complex liability exposures.

Starwind Casualty helps to place challenging excess liability risks that require specialized underwriting insight and broad market access. Whether it’s a layered casualty program, a hospitality account with significant assault-and-battery exposure, a large real estate portfolio, or a complex product liability risk, our team helps brokers navigate difficult placements and develop tailored solutions that meet their clients’ evolving needs. That combination of specialized knowledge, strong carrier relationships, and responsive service is why Starwind Casualty remains the go-to for today’s increasingly complex excess liability market.

CONTRIBUTORS

• Jeff Kilmartin is President and Chief Underwriting Officer Venture Underwriters for Excess Casualty, a program within Starwind Casualty.

END NOTES

1. The Daily Actuary. Social Inflation & Litigation Trends 2026: The $529 Billion Challenge Reshaping Casualty Insurance. https://actuary.info/insights/social-inflation-litigation-trends-2026
2. NAIC. Social Inflation. https://content.naic.org/insurance-topics/social-inflation
3. Risk Coverage Hub. Social Inflation and Nuclear Verdicts: The Insurance Pricing Spiral Reshaping Liability Markets. https://riskcoveragehub.com/social-inflation-nuclear-verdicts-insurance-pricing-spiral-2026/
4. Research Nester. Litigation Funding Investment Market Outlook. https://www.researchnester.com/reports/litigation-funding-investment-market/2800
5. Justia. Negligent or Inadequate Security Leading to Premises Liability Lawsuits. https://www.justia.com/injury/premises-liability/
6. Insurance Curator. Overserving and Intoxicated Patrons: Legal Risks and Practical Prevention Tactics. https://insurancecurator.com/overserving-and-intoxicated-patrons-legal-risks-and-practical-prevention-tactics/
7. Risk & Insurance. 2025 Product Recalls Increase Amid Shifting US Regulatory Landscape. https://riskandinsurance.com/2025-product-recalls-increase-amid-shifting-us-regulatory-landscape/
8. Westfleet Advisors. The Westfleet Insider: 2025 Litigation Finance Market Report. https://www.westfleetadvisors.com/publications/
9. CRC Group. Excess + Umbrella REDY Index Q1 2026. https://www.crcgroup.com/Tools-Intel/Specialty-Tools-Intel/excess-umbrella-redy-index-q1-2026