Moody’s, a global provider of credit ratings, research and risk analytics, assesses that casualty insurance is at an earlier stage of analytical development than property catastrophe insurance, but is beginning to show some of the characteristics of a maturing analytical market.
The US commercial casualty market represents approximately $300 billion in annual premium, making it one of the largest segments of commercial insurance. Yet the data standards, modelling frameworks and market-wide practices used to measure casualty accumulation are not as established as those used in property catastrophe insurance.
According to Moody’s, the casualty market is broadly at a stage comparable with where property catastrophe insurance was in the mid-1990s. This is a market-level observation rather than a judgement on individual insurers: sophisticated approaches already exist, but adoption across the market remains uneven.
Moody’s explains that the comparison with property is useful because catastrophe modelling developed through the combined influence of scientific research, commercial adoption, regulation, improved data and major loss events. Moody’s considers that casualty can benefit from those lessons, while taking advantage of technology that was not available during property’s early development.
The two markets nevertheless present very different analytical challenges. Property catastrophe risk can often be linked to physical characteristics such as location, hazard and vulnerability. Casualty develops through corporate activity, human behaviour, scientific findings, regulation and litigation. An emerging liability can therefore accumulate for years before its financial consequences become visible in claims data.
For Moody’s, improving visibility is therefore central to casualty’s analytical development. The aim is not to eliminate uncertainty, but to improve the ability to identify exposure, measure accumulation and consider potential outcomes before risks are fully reflected in historical loss experience.
Moody’s explains that property provides a useful precedent. Commercial catastrophe models emerged in the late 1980s, but adoption accelerated after major events including Hurricane Andrew in 1992 and the Northridge earthquake in 1994 exposed the limitations of traditional approaches to accumulation. Regulatory and rating agency requirements added further momentum, while subsequent catastrophes reinforced the value of probabilistic modelling and portfolio-level exposure management.
Over time, catastrophe analytics became embedded in property underwriting, portfolio management, capital planning and risk transfer. Exposure became more structured and the market developed a more consistent framework for understanding catastrophe risk.
Moody’s sees casualty at an earlier point on a comparable curve. Commercial forward-looking casualty analytics are available, regulatory and rating agency interest is developing, and research is generating earlier signals around emerging liabilities. However, broad adoption and consistent exposure standards remain less developed.
Asbestos demonstrates the consequences of limited visibility in casualty insurance. Unlike a natural catastrophe, exposure accumulated over decades before its financial impact emerged through claims and litigation. Moody’s cites AM Best’s estimate of ultimate net asbestos losses at approximately $100 billion, with a further $46 billion in environmental losses. More recently, Moody’s analysis of US Schedule P data found more than $35 billion of adverse development in general liability over eight years, approaching $100 billion when commercial auto is included.
Moody’s is therefore emphasising forward-looking casualty analytics alongside traditional loss experience. Its CoMeta platform monitors more than 300 emerging liability risks and, according to Moody’s, has identified risks including PFOS, opioids, glyphosate and addictive software design before widespread litigation. The aim is to give insurers earlier information to support underwriting, portfolio management and capital decisions.
A key challenge remains exposure data. While property catastrophe insurance has developed relatively consistent exposure standards and modelling practices, casualty data remains more fragmented, making accumulation harder to measure across insureds, industries and lines of business.
Moody’s sees better exposure management, forward-looking analytics and litigation intelligence as important steps towards greater analytical maturity. Its litigation-tracking capabilities use US court filings to provide insurers with structured information on emerging litigation, while CoMeta provides a forward-looking view of emerging liability risks.
The comparison with property does not mean casualty will become equally predictable. Rather, Moody’s sees an opportunity for insurers to develop a more consistent framework for identifying, quantifying and managing liability risk. Its investment in Praedicat, CoMeta and related casualty capabilities reflects that focus, as the market moves towards the level of analytical maturity already established in property catastrophe insurance.
