Newsletter

Liability Insurance Market Update

Hard Market

If you follow the news, you are aware that civil jury verdicts in California have been reaching record levels. Large awards that once seemed extraordinary are increasingly common, and the trend shows no sign of slowing. What you may not know is how directly and materially these conditions are affecting the cost of coverage for Authority members and public agencies more broadly throughout the state.

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The liability insurance market continues to harden. Carrier capacity has diminished, the number of reinsurers willing to write California public entity business has declined, and those that remain are applying increasingly restrictive terms and conditions. This is an industry-wide problem impacting schools, counties, cities, and special districts alike. Many JPAs and self-insured programs are experiencing reserve depletion as high-severity liability claims continue to escalate.

Root Cause

The root cause is social inflation—a term used to describe the way legal, cultural, and societal trends drive claim costs beyond what can be explained by economic inflation alone. Contributing factors include:

• Broader definitions of liability
• Third-party litigation financing
• Inflated settlement valuations
• Social media impact on public opinion
• Nuclear verdicts (exceeding $10 million)
• An aggressive and well-organized plaintiffs’ bar
• Courts and juries favoring plaintiffs
• Case law eroding governmental immunities

Claim categories experiencing the most pronounced cost escalation among California cities and municipal service organizations include vehicle accidents, allegations of hazardous conditions of public property, employment practices liability, slip-and-fall incidents, and police use of force cases. Unfortunately, large verdicts set new baselines for future settlement demands in comparable cases, reinforcing the rising cost trajectory.

Member Contributions

Member contributions for liability coverage have increased between 25 and 30 percent on average for most members going into 2026-27. This is a significant cost increase impacting both the primary and excess liability programs. It is a direct consequence of the claim trends described above. Conversely, other coverage lines, including workers’ compensation and first-party property, are performing well and experiencing normal claims activity and stable financial performance.

What the Authority is Doing

During hard markets, the value of Authority membership becomes more apparent. When conditions are difficult, the advantages of shared resources, collective purchasing power, a unified market presence, and specialized expertise prove indispensable. This underscores the importance of the Authority’s longstanding practices, close collaboration with members, and risk management focus dedicated to protecting the communities we serve.

The Authority is actively leveraging its size and collective resources to address rising liability costs—working to prevent, control, and mitigate losses, pursuing meaningful legislative reform, and keeping members informed every step of the way. Our goal is to provide a clear picture of the challenges we face and what we are doing together to address them.

In addition to extensive discussion and analysis at the advisory committee level, individual member meetings are being held upon request to field questions and provide additional information. The Authority’s website will be updated in early April with a new resource page that provides more detailed information on annual contributions, social inflation, and legislative advocacy efforts.

We are grateful for the trust our members place in the Authority and are committed to earning it every day.

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