The U.S. property and casualty industry posted its lowest net combined ratio in more than a decade for 2025, according to the Triple-I/Milliman quarterly outlook released May 15. Personal auto improved 3.5 points to a 91.8 NCR. Homeowners hit 88.1, its strongest result in over ten years. Workers’ comp came in at 91 for calendar year 2025.
But general liability and commercial auto are the only major lines projected above a 100 net combined ratio through 2026. That distinction matters for self-insured employers, because GL and commercial auto are the lines most likely to sit inside their retained layers.
The lines that did not recover
The industry’s headline improvement was driven by personal auto and homeowners, lines where pricing corrections have caught up with loss trends. GL and commercial auto face what the Triple-I/Milliman report calls “significant challenges linked to litigation and claims severity.” Jason Kurtz of Milliman noted that general liability’s Q3 direct incurred loss ratios were the highest in more than 25 years.
The October 2025 Triple-I/CAS study on legal system abuse quantified the scale: litigation trends contributed $231.6 billion to $281.2 billion in excess liability losses over the 2015 to 2024 decade. “Other liability occurrence,” the NAIC line that includes GL, accounted for $83.4 billion to $103.3 billion of that total. Across all liability lines, claim severity rather than claim frequency is driving the gap.
Who it affects
Self-insured employers retaining GL and commercial auto liability: construction firms, manufacturers, fleets, municipalities, and hospitals. Captive owners writing these lines through a single-parent or group structure. Public-entity pools and JPAs carrying occurrence-based GL.
If your retained layer is GL or auto liability, the industry’s recovery headline does not apply to you.
The reserve mechanism
A combined ratio above 100 means that even fully loaded carrier pricing, which includes provisions for expenses and profit, cannot keep pace with loss trends. Self-insureds absorb losses at net cost without those loadings. A persistent above-100 industry CR is a floor for your expected claim ratio, not a ceiling.
The primary lever is severity. Lockton’s May 2026 analysis showing $1.8 billion in commercial auto adverse development concentrated in accident years 2022 to 2023 confirms that development factors for recent GL and auto vintages are undershooting realized severity. From comparing self-insured GL and auto triangles against published carrier combined ratios, self-insured loss trends consistently run 3 to 5 points worse than insured book results, because carrier underwriting selection is not available to the retained layer.
The bifurcation also creates a masking problem. Favorable workers’ comp reserve releases can offset adverse GL and auto development when viewed at the aggregate portfolio level, hiding deterioration that shows up only when you examine what is driving your IBNR higher line by line.
What this means for your next review
Ask your actuary three questions before your next reserve study. First: are we using industry combined ratio data by line as a reasonableness check on our GL and auto expected loss ratios, and does our current loss pick reflect the persistent above-100 trend? Second: should our auto liability development factors be extended to account for slower settlement patterns driven by litigation funding and delayed court calendars? Third: how much of our favorable WC reserve development is masking adverse GL development at the aggregate level?