Casualty Risk Is Rewriting Balance Sheet Exposure

Liability severity is rising, volatility is increasing and many companies are retaining more casualty risk than they were a decade ago, often without changing how that exposure is measured, financed or reflected in capital decisions. Casualty risk is shifting from an insurance procurement issue to a balance sheet exposure that can materially influence earnings volatility. Businesses are not increasing the limits they purchase, creating a gap between rising liability severity and relatively stable insurance program structures.