Aon and Moody's Project $5B Growth in Casualty Reinsurance Sector

Emerging liability risks could generate up to $5 billion in new annual reinsurance premiums, according to a new report from Aon and Moody's, The Coming Casualty Catastrophe Market Could See up to $5 Billion in New Opportunities. The report outlines how exposures such as per- and polyfluoroalkyl substances (PFAS) contamination, microplastics, addictive technologies, and ultra-processed foods are driving heightened claims volatility and fueling demand for expanded liability coverage.

According to the report, a significant contributor to this shift is the rapid rise in litigation, particularly in the US, where legal action against previously unchallenged defendants has become increasingly viable. The report noted that 6 of the 13 largest losses in the US property and casualty sector were casualty related, with deficient reserving cited as a key factor in insurer impairments.

Per the report, increased interest in legacy liability transactions, structured reinsurance, and parametric products is expected to supplement premium growth. These approaches aim to help insurers manage the complexity and uncertainty of new forms of liability risk.

According to Aon and Moody's, named peril reinsurance solutions offer targeted protection for emerging risks that are pre-litigation but measurable—such as specific chemicals, materials, or product types. These solutions are intended to provide greater underwriting precision compared to traditional casualty policies, which often lack clarity and specificity.

Per the report, new catastrophe modeling tools and artificial intelligence-enabled analytics will be essential to understanding and pricing these risks, as insurers seek to shift from qualitative judgment to data-backed evaluation.

The report also highlights a growing interest in environmental, social, and governance (ESG) pressures and reputational risks as catalysts for new claims. According to Aon and Moody's, these pressures are increasingly influencing liability outcomes, further underscoring the need for enhanced modeling and product innovation.

Aon and Moody's said reinsurers and capital providers who are willing to invest in the tools, data, and structures required to underwrite these exposures could be well positioned to support a more resilient and scalable casualty market.