By Michael Loney

June 11 - (The Insurer) - The casualty market is staying disciplined in its limit deployment in the face of legal system abuse including litigation funding and increasing use of time limit demands, leaders from Crum & Forster, American Financial Group, USAA and Travelers suggested.

Panelists at S&P Global Ratings’ 2025 Annual Insurance Conference in New York last week suggested that continued casualty rate increases would be needed in the absence of tort reform.

Crum & Forster chairman and CEO Marc Adee suggested that he is not yet seeing worrying behaviour from casualty underwriters, with the contraction in limits in recent years not being reversed.

“I think the sign of the apocalypse will be when people start putting out bigger limit stacks,” said Adee. “I think a lot of the defense on casualty over the last seven, eight years has been limits compression.”

Adee highlighted last month’s announcement of a new excess casualty facility from Chubb, Zurich North America and National Indemnity that can offer up to $100 million in lead excess casualty insurance capacity for large national and multinational companies.

“When I was first reading the headline it was a little bit of a heart attack,” said Adee. “But (then he saw) they said it was going to be claims made, which actually is pretty creative. We'll see how that plays out. But if people day in, day out are putting out $100 million dollar stacks I don't think that's going to be good.”

Carl Lindner, co-CEO of American Financial Group, said his company is feeling better about the rate adequacy for casualty business than previously, but he remains most concerned with commercial auto liability.

“We’ve been taking rate for 10 years in a row but I think until there's a move toward reform and an effort on litigation funding we're stuck in a cycle where the industry is going to have to take rate that stays up with loss ratio trends there,” he said.

Crum & Forster’s Adee said that commercial auto has probably had 10 years of unprofitability, and is “the poster child for social inflation”.

He described the dynamic with litigation funding as “a jury basically wasting their time deciding to take the insurance company's money and give it to a bunch of hedge fund guys, with the plaintiff and defendant as kind of paid actors”.

“But the bigger issue is this time limit demand dynamic that is out there now. You can be going through your normal claim process and it takes a somewhat normal amount of time, and then you get one of these time limit demands that opens your limits up, and now you've got a whole other kind of claim going on,” he said.

“If you've ever negotiated one of those, it's not fun. But I think there are a whole slew of different aspects to the legal abuse reform that people should think about.”

USAA CEO Juan Andrade agreed that tort reform is needed.

“We talk about nuclear verdicts, but at some point we've got to stop referring it to them as nuclear because they're happening so often,” he said.

Travelers chairman and CEO Alan Schnitzer said his company has invested significantly in strategies to combat legal system abuse. He said these stategies can be placed into three buckets.

The first bucket is lobbying. “I wish I were more optimistic we could get something done at the federal level, but I don't think we can get past filibuster rules,” he said.

Schnitzer said that some progress on third party litigation financing may be possible in Congress.

“I think the degree to which we've got foreign persons investing in our broken tort system through third-party litigation financing is getting a lot of interest in Washington,” he said.

Schnitzer said there has been some progress at a state level, however.

“We have a very aggressive ground game when it comes to lobbying, both as a company and through our trade association with notable wins in Texas and Georgia very recently. Some states have adopted third-party litigation financing disclosures, which is really important and very helpful.”

The second bucket is the programmatic steps that Travelers is taking.

“We evaluate the strategies and tactics of the plaintiffs’ bars, and we put in place our own programmatic strategies and tactics to counterbalance that. All I'll say about that is it's leveraging behavioural science and predictive models to put ourselves in a better position to counteract some of their tactics and strategies,” he said.

The third bucket is at the claim level, with tactics and strategies that Travelers employs to put itself in a better position to resolve cases.