Evercore ISI, an independent research and investment advisory firm, reports that casualty reserves remain under pressure across the US property & casualty (P&C) insurance market.
To better understand social inflation trends, Evercore has conducted an updated review of court awards, analysing more than 8,000 cases from 2016 through December 2025, including 553 cases from 2025 and roughly 2,000 newly added cases. The analysis tracks changes in median and average award values to quantify social inflation, isolating it from broader economic inflation by adjusting for CPI.
Evercore’s findings indicate social inflation is intensifying. Median awards increased 23% in 2025 to $4.9 million, following 20–21% annual growth from 2022–2024. Median awards are now 108% higher than in 2019, reflecting an annualised growth rate of 13% compared with roughly 6% per year from 2016–2019.
The company estimates that six percentage points of this annual growth are driven by social inflation, with one percentage point attributable to economic inflation. Average awards, which are more affected by extreme verdicts, fell 19% in 2025 to $46 million but remain 71% above 2019 levels, growing 9.4% per year.
Evercore observes that the post-COVID surge in court awards in 2021 and 2022 initially reflected prioritisation of severe cases by courts. However, sustained median growth above 20% per year indicates a new baseline in social inflation.
Settlement activity also reflects this dynamic: although settlement rates declined in 2025, settlement values increased 45% (after a 23% increase in 2024), suggesting more defendants are settling for higher amounts to avoid the risk of nuclear verdicts. Several insurers, including AIG, HIG, WRB, and LM, have implemented this approach to accelerate claim resolution and manage tail risk.
Despite elevated casualty loss trends, Evercore notes early signs of rate moderation in certain lines. CIAB and CRC surveys, along with 3Q25 results from CB and HIG, indicate modest casualty rate softening, potentially reflecting insurers’ adaptation to accelerated loss costs. However, other surveys (IVANS, Liberty) continue to show either accelerating or stable rate trends. Overall, casualty pricing may continue to serve as an offset to softening property rates.
The 23% increase in the 2025 median award underscores the ongoing impact of social inflation and elevated casualty loss trends. Reserve volatility is likely to persist across the industry, reinforcing the need for disciplined casualty pricing. While some insurers may be moderating rate increases after adjusting to elevated loss trends, Evercore views the environment as mixed.
Elevated social inflation continues to create challenges for commercial lines insurers outside of CB and TRV, while brokers appear to have priced for softer market conditions. Evercore continues to prefer AON due to specific operational exposures and other idiosyncratic factors.
About the Author
