On July 13, 2026, AM Best reported that the US property/casualty industry booked its strongest underwriting result in a decade, with a 93 calendar-year combined ratio and about $61.2 billion in 2025 underwriting income, roughly $84 billion across 2024 and 2025 combined (AM Best market segment report; Claims Journal summary). The headline is a property and personal-lines story. The number a self-insured casualty buyer should read is the one buried under it: casualty is still deteriorating.
AM Best is explicit that “commercial auto liability and other liability (occurrence) lines remain pressured by adverse development and elevated claims severity.” Commercial auto took “another $2.0 billion in reserve deficiencies in 2025, mostly on the reserves of the recent accident years, 2023 and 2024.” Other liability (occurrence) ran a 114.7 combined ratio and roughly $11 billion in underwriting loss for the year. The report ties the pressure to social inflation, third-party litigation funding, and rising jury awards.
Who it affects
Self-insured employers, single-parent and group captives, and public-entity pools that carry general liability, umbrella, or auto liability and that set an expected loss ratio by glancing at industry benchmarks. A national manufacturer with a $1 million self-insured retention on GL, a municipal pool writing auto liability, and a hospital system funding an excess-of-loss layer all price next year’s accruals partly off what the market says loss experience looks like.
The reserve mechanism
The lever is the split between calendar-year and accident-year results, and behind it the expected loss ratio and tail factor you select. A 93 combined ratio is a calendar-year figure. It blends current property and personal-lines rate strength with reserve movements on every prior year at once. Short-tail lines release redundancy fast and flatter the aggregate. Long-tail casualty does the opposite: accident years 2021 through 2024 are still emerging, and each year of adverse development lands in the calendar-year books years after the policy was written. Benchmark your GL or auto expected loss ratio to a blended 93, and you import short-tail redundancy into a book whose losses have not finished developing.
Where this shows up in your reserves
On the other liability and commercial auto rows of your development triangle, and specifically in the tail factors applied to accident years 2021 through 2024. If your reserving actuary carried those tails flat while carriers added $2.0 billion to commercial auto and ran other liability above a 114 combined ratio, your case-reserve adequacy on open liability claims is the line to test first. The industry-wide other liability shortfall and the commercial auto reserve deficiency both surface in the same place.
What this means for your next review
Ask your actuary to show accident-year loss ratios for your casualty lines next to the calendar-year benchmark, not instead of it. A softening market makes this trap wider, because falling rate compresses margin on the very accident years still developing, a point actuary.info’s soft-market reserve playbook and Lockton’s casualty gap analysis both make. See our explainer on case reserve strengthening for reading the signal on open claims.
Decision-maker checklist
- Ask for accident-year loss ratios on GL and auto liability, separate from the blended benchmark.
- Confirm your 2021-2024 tail factors reflect continued casualty development, not a flat carry-forward.
- Stress the expected loss ratio you fund next year against a 114-plus other-liability combined ratio.
- Flag any retention where rate cuts are thinning margin on still-developing accident years.
Sources
- AM Best, U.S. Property/Casualty Sector Notches Strongest Performance in a Decade (July 13, 2026)
- Claims Journal, US P/C Industry Books Best Result in a Decade but Not All Lines Enjoy Success
- actuary.info, Soft Market Returns to P&C: A Reserve Adequacy Playbook for the 2026 Pricing Downturn
- actuary.info, Social Inflation and Litigation Trends 2026: The $529 Billion Challenge