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Digital EditionCasualty’s Imbalance Problem: Technology Lowers Some Risks, Society Raises Others
Jayson Taylor is Head of Casualty at MSIG USA, responsible for strategy, underwriting, product development, and portfolio management with a focus on profitable growth, technical discipline, and alignment with broader business objectives. Reach out to MSIG USA at [email protected].
Predicting anything with precision is extremely difficult. Even with decades of historical data, expanding datasets, sophisticated AI models, and faster analytics, insurers still can’t predict next year’s hurricanes, casualty frequency spikes, or the timing of the next Black Swan event. The industry has better tools, but not better certainty.
AI breakthroughs outside of the industry make that limitation clear. Google DeepMind’s GenCast, first introduced in 2024, for example, can outperform one of the world’s leading weather models in predicting day-to-day forecasts and even the path of hurricanes, but only up to 15 days in advance. It represents real progress in short-range forecasting, yet it stops well short of providing the long-range visibility insurers need to anticipate next year’s risk environment. Casualty faces that same constraint: models can estimate long-term probability, but they cannot tell us when severity will surge or when social and legal pressures will shift.
Meanwhile, opposing forces are reshaping the line itself. Technology is improving some of the most unstable aspects of casualty risk, particularly where human error has historically driven loss. Robotics, automation, and telematics are reducing exposure in workplaces and on the road, creating safer environments and narrowing the range of potential outcomes. But other behavioral and societal forces are moving shapely in the opposite direction, including increasing violence and the accelerating impact of third-party litigation financing, which continues to push severity upward across auto and general liability.
This is why casualty in 2026 won’t move as a single market. Some risks are stabilizing as technology keeps people farther from harm, while others are becoming harder to price. The year ahead will be defined by this imbalance and unpredictability.
Workers’ Compensation: A Rare Area of Stability
Workers’ compensation has been one of the most stable lines in recent years. Robotics and automation now handle many of the high-exposure tasks in manufacturing, welding, and material handling, keeping workers farther from the sources of catastrophic injury. Automated movement systems — everything from robotic forklifts to autonomous carts — have reduced the need for workers to operate in traditional danger zones.
These improvements are showing up in the numbers. According to the National Council on Compensation (NCCI), workers’ compensation premium declined 3% in 2024, and the line posted a calendar-year combined ratio of 86%. This is all as both medical claim severity and indemnity claim severity grew by 6%. As more industries continue adopting robotics and machine-assisted processes, workers’ comp may remain one of the only casualty lines with genuine downward or flat pressure in 2026.
Commercial Auto: The Line Most Likely to Transform
Commercial auto enters 2026 at an inflection point. Despite potential safety gains, severity in commercial auto continues to rise, driven by a mix of higher repair costs, more distracted driving, and the growing influence of third-party litigation financing. Autonomous technologies add another layer. Early driverless experiences show how quickly responsibility may shift from the individual behind the wheel to the manufacturer or software provider.
Telematics, cameras, sensors, automatic braking, and lane-keeping systems have been on the market for years, but their impact has been uneven. Many fleets adopted the technology without integrating its data and insights into business risk management efforts. As more fleets choose adoption, engagement with data promises more driver coaching and the potential for a reduction in claims. Commercial auto is still one of the toughest casualty lines, but the foundation for improvement is finally on the road ahead.
Violence and Social Volatility: A Growing, Hard-to-Price Exposure
While violence-related events still lack a dedicated casualty line for most insureds, the exposure continues to expand across industries and locations. The FBI designated 229 active shooter incidents from 2019 to 2023, an 89% increase over the previous five-year period, and what was once a threat to primarily schools and nonprofits has expanded into settings once thought to be lower-risk.
Most general liability policies include some level of protection, and workers’ comp will apply when employees are injured on the job, but litigation funding can magnify severity by increasing settlement expectations and extending disputes, creating outcomes that far exceed historical norms. Risk managers will need to review wording, limits, and exclusions more carefully in their general liability and workers’ compensation lines and consider dedicated lines of coverage for emerging risks in this area. For insurers, pricing and underwriting must account for a broader, more legally complex exposure.
A Market Pulled in Opposing Directions
Third-party litigation financing remains one of the strongest drivers escalating severity across casualty and impacting each of these coverage lines. It extends disputes, raises settlement expectations, and diverts a significant share of recoveries away from injured plaintiffs. Because funding arrangements are rarely disclosed, juries make decisions without understanding the financial incentives influencing the litigation, leaving the system fundamentally unbalanced.
For casualty to remain sustainable into 2026 and beyond, insurers need more than better models. They need a fairer legal environment. The most meaningful step forward is transparency. Several states have already begun to act, and 2026 will be an important test on whether disclosure can restore balance and improve outcomes.
But insureds can’t wait for the environment to adapt. They should partner with an insurer that understands how behavior and technology intersect and can underwrite with discipline despite the volatility. A strong carrier partner will provide insureds with a forward-looking view of emerging exposures, enabling them to evaluate risk and clarity even when the market is moving in opposing directions. &
