Independent research and investment advisory firm Evercore ISI reports that casualty reserves remain under pressure in the U.S. property and casualty (P&C) insurance market.
Debt levels at companies such as CB, Berkshire, EG, SIGI and CINF continue to fluctuate, with long-tail liability losses only partially offset by short-tail releases.
To better understand social inflation trends, Evercore conducted an updated review of court decisions, analyzing more than 8,000 cases from 2016 to December 2025, including 553 cases in 2025 and approximately 2,000 new cases. The analysis tracks changes in median and average reward values ​​to quantify social inflation and distinguish it from inflation in the wider economy by adjusting the Consumer Price Index.
Evercore’s findings suggest that inflation is rising in society. The median bonus will grow 23% to $4.9 million in 2025, following annual growth of 20% to 21% from 2022 to 2024. The current median award is 108% higher than in 2019, with an annual growth rate of 13%, compared with approximately 6% annual growth from 2016 to 2019.
The firm estimates that six percentage points of annual growth were driven by social inflation and one percentage point by economic inflation. The average bonus, which is more affected by extreme verdicts, fell 19% to $46 million in 2025, but is still 71% above 2019 levels and growing 9.4% annually.
Evercore observed that the surge in court rulings in 2021 and 2022 in the aftermath of the coronavirus pandemic initially reflected courts’ prioritization of serious cases. However, continued median growth above 20% per year suggests that social inflation has reached a new benchmark.
Settlement activity also reflects this dynamic: Although settlement rates declined in 2025, settlement values ​​increased by 45% (up from 23% in 2024), indicating that more defendants are settling for higher amounts to avoid the risk of nuclear awards. Several insurance companies, including AIG, HIG, WRB and LM, have implemented this approach to speed claims resolution and manage tail risk.
Despite the upward trend in casualty losses, Evercore noted early signs of slowing casualty rates on some lines. Q3 2025 results from the CIAB and CRC surveys and the CB and HIG show a slight decline in casualty rates, which may reflect insurers’ adaptation to accelerated loss costs. However, other surveys (IVANS, Liberty) continue to show accelerating or stabilizing interest rate trends. Overall, casualty pricing is likely to continue to offset softening property prices.
The 23% increase in median compensation in 2025 highlights the ongoing impact of rising social inflation and casualty loss trends. Volatility in reserves across the industry is likely to persist, reinforcing the need for rigorous casualty pricing. While some insurers may be slowing rate increases as they adjust to rising losses, Evercore sees a mixed environment.
Rising social inflation continues to pose challenges for commercial lines insurers outside of CB and TRV, and brokers appear to have priced in for softer market conditions. Evercore continues to favor AON due to certain operational risks and other special factors.
