Outlook into the 2025 General Liability Insurance Market

Following years of challenges marked by rising claims and poor underwriting results, the general liability insurance market stabilized in 2024. Rate increases moderated for many policyholders, with most premiums rising from 4% to 5%. This is a notable improvement over the double-digit rate increases from previous years. However, hard conditions persist for high-risk sectors and businesses with poor loss histories. Due to frequent claims and legal risks, industries such as construction, affordable housing and hospitality still face unique challenges.

In the year ahead, insurers will prioritize profitability with stringent underwriting practices. While market capacity remains healthy, insurers will continue to evaluate businesses based on their risk profile, industry and past claims.

Factors Driving Market Stabilization

The improved outlook stems from several key developments, including:

• Increased Capacity: More resources available make it easier to offer competitive options.
• Stronger Financial Performance: Improved returns allow insurers to stabilize pricing and expand coverage options.
• Data-driven Insights: Insurers are leveraging advanced technology and updated catastrophe models to better understand risks.

Trends Shaping the General Liability Insurance Market

Litigation

Rising costs in general liability insurance are heavily influenced by increases in investments from hedge funds and financiers in liability law firms. These firms, empowered by substantial financial backing, employ aggressive advertising campaigns. They often use tactics like filing extensive motions, employing broad discovery requests and prolonging court proceedings to inflate claim costs.

Key drivers of litigation growth include:

• Attorney Advertising: The surge of attorney advertising across TV, print and social media is encouraging more lawsuits.
• Third-party Litigation Funding (TPLF): Projected to reach $30 billion globally by 2028, TPLF allows investors to finance lawsuits in exchange for a share of the settlement. The funding helps costly cases move forward, often leading to prolonged litigation and larger awards.
• Nuclear Verdicts: These soaring jury awards exceeding $10 million are driving up insurance costs, fueled by corporate distrust, safety violations and negligence claims.

Growing legal costs and rising claim frequencies and severity have created significant challenges for general liability insurance. Many businesses may face coverage gaps, exposing them to substantial out-of-pocket expenses.

Biometric Data Losses

Biometric technologies like facial recognition, iris scans, fingerprints and voiceprints are increasingly used for security, access control, personalized marketing and attendance tracking. However, they pose significant privacy and security risks. Improper data collection, processing, sharing or storage of biometric data can lead to costly lawsuits, especially if data is compromised.

While current federal law doesn’t specifically regulate biometric data, existing legislation, such as Health Insurance Portability and Accountability Act (HIPPA) and the Children’s Online Privacy Protection Act (COPPA), address certain aspects. Additionally, over 10 states have proposed biometric data privacy laws. Non-compliance can result in large fines, from thousands to millions, and strict sanctions.

Many businesses rely on the personal and advertising injury provision of their general liability policy for protection against privacy violations, but insurers often dispute these claims. The Insurance Services Office recently updated general liability exclusions to include biometric information and introduced endorsements that limit coverage for related violations.

Active Assailant Exposures

Active assailant incidents (e.g., active shooter events, mass shootings) have become increasingly common. According to the FBI, there were 229 active shooter events from 2019 to 2023, an 89% increase over the previous five years. The aftermath extends far beyond physical injuries and fatalities, often leaving businesses to contend with:

• Emotional Trauma: Long-term psychological effects on employees and customers
• Financial Strain: Recovery costs related to property damage, business interruption and liability claims
• Legal Risks: Lawsuits and penalties for inadequate security measures

Many businesses invest in specialized insurance policies to cover losses from active shooter incidents. Coverage typically includes property damage, business interruption, third-party liability, crisis management, counseling and medical expenses. This protection is critical as general liability policies often exclude coverage for violent acts or emotional trauma claims.

Perfluorosulfonic Acids (PFAS) Exposure

Per- and poly-fluoroalkyl substances (PFAS) are a group of over 7,000 chemicals linked to various health complications, making them a focus of growing regulatory action. Federal efforts are making progress toward addressing PFAS contamination through improved regulations, increased monitoring and stricter controls to minimize environmental and health risks associated with these substances.

Additionally, 34 states have introduced PFAS restrictions, with 28 having adopted legislation. Organizations found responsible for PFAS contamination face heightened risks of litigation and liability. Many carriers exclude coverage for PFAS-related claims, leaving companies with additional exposures.

PFAS contamination has sparked numerous lawsuits, particularly against manufacturers accused of polluting soil and water sources. However, industries using PFAS-containing products or packaging are also at risk. Compounding these challenges, many insurers have introduced exclusions for PFAS-related claims within general liability policies.

PFAS claims are challenging due to the long delay between exposure and injury, often taking decades to surface. General liability policies usually cover claims based on when the injury occurred, not when the claim is filed. Businesses seeking coverage for older claims may need to find policies issued before the mid-1980s, as these often lack pollution exclusions. However, newer policies with absolute pollution exclusions provide limited options for addressing PFAS liabilities.

Want to dive deeper into the P&C market trends shaping your business in 2025? Download our comprehensive P&C Market Outlook today to stay ahead of emerging risks and evolving coverage options.

Risk Management Strategies

• Optimize Risk Management: Partner with your insurance advisor to gain insights on current market challenges that may impact your rates. Leverage their expertise to create tailored loss control measures.
• Enhance Safety Measures: Implement proactive safety protocols, such as staff training, safety audits and emergency response plans, to reduce incidents and safeguard employees and customers.
• Maintain Records: Document policies, training logs and incidents to demonstrate risk mitigation efforts curing claims or litigation.
• Ensure Data Transparency: Communicate how biometric data is collected, used and stored to employees and customers to help ensure compliance with privacy laws.
• Minimize PFAS Exposure: Develop policies to limit PFAS use and consult legal counsel to adhere to existing and new regulations.
• Review Coverage: Regularly evaluate your general liability coverage with an insurance advisor to align policy limits with evolving insurance needs.

We’re Here to Help Protect Your Business

Experts predict a 1% to 9% increase in general liability insurance premiums in 2025. Fortunately, you’re not in this alone. We’re here to help you understand the current insurance market and implement risk management strategies to protect your organization. If you have more questions about your coverage or the status of the market, connect with a member of our team .