Alliant recently issued its 2025 insurance Marketplace Insights and Observations Mid-Year Report, and we have included the Public Entity Industry update below. To view the complete report please click this link.
INDUSTRY ISSUES
Forecasting outcomes for 2025 varies significantly by line of coverage. While the property market is shifting in a more favorable direction compared to recent years, the casualty market continues to face headwinds—particularly around pricing, capacity, and placement timelines.
INDUSTRY OUTLOOK
The property market is currently experiencing its most competitive environment in years. Carriers are eager for growth, and capacity is readily available. Following an extended period of exceptionally challenging hard market conditions, more favorable dynamics have emerged. Despite this, commercial property losses remain elevated—2025 has already seen over $20B in insured losses from severe convective storms and more than $40B from California wildfires. Nonetheless, the significant rate increases from 2017 through 2023 have left carriers well-positioned to withstand these losses, supported by back-to-back profitable years in 2023 and 2024. As the industry enters hurricane season, all eyes turn to the Atlantic.
Sea surface temperatures are currently lower than at this point in 2023 and 2024, and NOAA has declared an official end to La Niña, confirming that El Niño–Southern Oscillation (ENSO)-neutral conditions are now in place. In other words, we are currently in a neutral phase. Despite this, global land and ocean temperatures are projected to remain among the highest on record. These elevated temperatures are expected to support conditions conducive to an average-to-above-average Atlantic hurricane season. As always, the ultimate impact on the industry will depend heavily on where storms make landfall. It is also worth noting that many coastal counties in Texas, Florida, Georgia, and the Carolinas have experienced population growth of more than 25–50% over the past 25 years—significantly increasing exposure levels in those regions.
In response to budgetary pressures, many insureds reduced overall program limits during recent renewals. Shared and layered programs are experiencing a high level of over-subscription and single-carrier programs should be able to generate interest from new markets as well. This dynamic should allow insureds to restore their limits to pre-2023 levels if desired.
Treaty renewals thus far in 2025 have generally been positive across key renewal dates. That said, attachment points remain above historical norms, leaving the direct and facultative (D&F) markets with greater net exposure. This dynamic underscores the importance of strong underwriting discipline, even amid growing competition.
KEY DIFFERENTIATORS THAT PUBLIC ENTITIES NEED TO CONSIDER IN 2025
Geopolitical instability has renewed focus on inflation, driven in part by tariffs on imported goods critical to the construction industry and the potential for workforce disruptions. It is imperative that insureds remain vigilant on this front. Given the typical size and complexity of public entity schedules, property underwriters continue to closely scrutinize insurance-to-value (ITV) metrics. To avoid restrictive policy provisions—such as margin clauses or occurrence limit of liability endorsements—insureds must substantiate their valuation methodologies through third-party appraisals (preferred), value trending analyses, or favorable benchmark comparisons.
This oversubscription is exerting downward pressure on the opportunistic pricing levels seen in recent years and may contribute to greater pricing stability, particularly in the excess layers. Single-carrier programs are also attracting competition, and many insureds should have the opportunity to increase overall program limits—subject to budget constraints.
Additionally, a growing number of insureds are exploring alternative risk transfer solutions to supplement their traditional insurance programs. These mechanisms can also serve as effective hedges against elevated attachment points or restrictive terms and conditions that have emerged in recent renewal cycles.
Submission Activity
Submission activity remains elevated; however, timing has become less of a concern compared to recent years. While market dynamics have shifted somewhat, brokers continue to market renewals broadly, and carriers are still receiving a high volume of submissions. Alliant brokers maintain a strong stance on the importance of early renewal submissions and strategic marketing to optimize outcomes.
Severe Convective Storm Impact
A dominant driver of losses in both 2023 ($65B) and 2024 ($58B), severe convective storm (SCS) impact does not show any signs of slowing down in 2025, tallying more than $20B in losses in the first half of the year. These numbers are staggering when compared to the $31B annual average of the last decade and continue to demonstrate that “secondary perils” are no longer able to be ignored. SCS has and continues to be a significant point of focus and loss driver for many national and regional insurance carriers.
Aging Infrastructure & Deferred Maintenance
Roof age remains a key underwriting focus, alongside overall building age and aging infrastructure. This is particularly true in the K-12 education sector, where insurers are increasingly requiring detailed documentation of roof conditions, including maintenance records, repair history, and evidence of recent re-roofing. In the absence of sufficient documentation, markets may impose actual cash value (ACV) provisions or other restrictive terms on older roofs.
Interior water damage claims continue to rise in both frequency and severity as systems and components reach the end of their useful life. In response, some carriers are introducing separate and higher deductibles specifically for this peril.
Wildfire
Wildfire concerns have expanded beyond traditional areas to states like North Carolina, Florida, and New Jersey due to persistent drought conditions. Wildfires are also becoming a focus for casualty placements in extreme circumstances, with excess liability insurers emphasizing wildfire mitigation plans and, in some cases, restricting coverage.
Zones for many perils are rapidly shifting from their historical norms—a peril that was formerly NOT considered to be a driver for some regions can quickly become a concern. Carriers are closely monitoring their exposures in all “emerging” geographies.
Property Market Trends and Pricing
In the current decade, CAT property loss activity in the United States has consistently approached or exceeded the $100B mark annually. This is in comparison to an inflation-adjusted $37B for the 2010s. Despite this trend, the re-underwriting efforts of major carriers have proven effective, resulting in positive performance in both 2023 and 2024.
Public entities must be prepared to navigate complexities due to their inherent value concentration, questions surrounding insurance-to-value (ITV), aging infrastructure, and pervasive deferred maintenance. To capitalize on the positive trends of the 2025 property market, best-in-class risks must strive to stand out from their peers. Prioritizing carrier profitability, leveraging lessons learned from past loss experiences, implementing robust risk control measures, and maintaining strong data integrity will be essential for securing the most competitive renewal terms and rate.
Casualty Market Trends, Pricing and Outlook
The public entity liability market continues to face upward pressure driven by several key factors, notably “social inflation”—the rising cost of insurance claims influenced by societal trends such as substantially increased jury awards. Additionally, economic inflation, a higher frequency and severity of auto liability losses, and the growing use of litigation financing further contribute to the challenges within this market. Loss costs are escalating at double-digit rates for insurers and, depending on the jurisdiction, often serve as the baseline for renewal negotiations. These loss cost increases, coupled with capacity reductions and higher retentions, continue to define a complex and challenging market environment. New markets entrants have the potential to disrupt this trend. Focused attention on risk control, early intervention, and ongoing education remains critical to achieving favorable renewal outcomes. Leading risks consistently distinguish themselves in the eyes of the market.
Underwriting decisions are increasingly influenced by risk selectivity and portfolio-wide considerations, including aggregation risk, ventilated capacity within tower structures, and sensitivity to attachment points, all of which prompt a more rigorous underwriting stance.
Reinsurer and carrier pricing models are trending toward more conservative approaches and higher limit factors, resulting in greater variability in self-funded layers. Alternative risk transfer mechanisms, such as structured solutions, are gaining traction as a strategic balance between traditional risk transfer and self-insurance. Creative solutions like corridor deductibles in lead and mid-excess layers are also receiving increased market support.
Law Enforcement Liability
Law enforcement liability continues to be a primary focus in underwriting due to its inherent complexities. This coverage line faces significant challenges stemming from heightened media scrutiny, civil unrest, and evolving federal court rulings. Many entities encounter difficulties in obtaining adequate and affordable policy terms while simultaneously addressing challenges in recruiting and retaining qualified personnel. Proactive measures—including the deployment of advanced technology, comprehensive training programs, and access to mental health services—are increasingly recognized as essential components in managing these risks effectively.
Biometric Identifiers
Concerns over biometric identifiers and privacy violations are rising, with increasing litigation and state regulations.
PFAS
Persistent environmental chemicals linked to health risks, with growing litigation potential for public entities operating water and wastewater treatment facilities, continue to pose challenges.
Additional Liability Coverages
Public officials liability, educators’ legal liability, and employment practices liability maintain stable rates; however, they are characterized by higher retentions and pricing levels compared to the private sector. Crime coverage, particularly policies with a faithful performance of duty extension, is becoming increasingly difficult to obtain due to heightened regulatory scrutiny.
Supreme Court Rulings
Recent rulings on higher education and affirmative action will impact recruitment policies and premiums, with a need for legislative guidance.
PTSD Presumptive Legislation
Expanding PTSD benefits for public safety personnel is leading public entities to explore alternative treatment and disability leave options.
Sexual Abuse and Molestation Coverages
Sexual abuse and molestation (SAM) liability coverage continues to be challenging to secure, with standalone policies growing more costly and restrictive. Enhanced risk mitigation measures—such as thorough background checks, continuous training programs, and heightened social awareness—are essential to managing exposures in this area.
Active Shooter Events
Rising concerns over mass shooting exposure have led to increased interest in active assailant and special event liability policies.