Transparency and stability are casualty’s best defence in turbulent times: Swiss Re

Casualty reinsurers need transparency, awareness of US-style legal tactics and risk adequate pricing, says Swiss Re’s Patrick Roder.

Key points:
US-style litigation tactics emerging
PFAS is a challenge
Stability valued over capital alone

A shifting risk appetite, stubborn liability claims inflation and a looming talent gap are setting the tone for Europe’s casualty market, according to Patrick Roder, head of casualty underwriting for EMEA at Swiss Re.

“It’s really three things shaping casualty as we head into renewal,” Roder told Baden-Baden Today. “First, a diverging risk appetite when it comes to large corporate risks; second, structurally higher liability inflation and third, talent succession.”

He noted some long-standing players are pulling back from large-corporate casualty, wary of exposure and recent loss experience, while others are stepping in – either opportunistically or strategically. “There are very different risk views across the market,” he said. “Depending on that view, there will be opportunities in some programmes and challenges in others. Transparency is key.”

Amid this volatility, “we want to provide consistency, transparency and no surprises”, Roder said.

The market is wrestling with “structurally higher liability claims inflation”, driven by wages, medical costs and judicial and societal shifts that are proving stickier than many pricing models anticipated.

Another issue is succession – an ageing underwriting bench. “A large number of experienced casualty treaty underwriters are retiring in the next couple of years, and the pipeline is not ideal in all segments,” Roder noted. “The industry can manage that challenge if we keep investing in recruiting, educating new underwriters and ensuring know-how transfer. Technology can help, but it’s a complement, not a substitute.”

“Without proper risk mitigation, PFAS are at the boundary of the insurability"

PFAS pushing the boundaries

Two exposures sit squarely on the risk radar: US legal system abuse and PFAS. The former, he explained, “is just a modern evolution of non-economic inflation; the exploitation of the legal system that leads to increased claim costs through prolonged litigation and outsized verdicts”.

PFAS, meanwhile, are pushing the boundaries of insurability altogether. “Without proper risk assessment and mitigation, PFAS are at the boundary of the insurability for standard products,” he warned, citing its accumulation potential and long-tail complexity.

In casualty inflation, the pattern is uneven but unmistakable. “There’s no single European trend,” Roder observed, but noted large bodily injury severities are increasing everywhere, especially where local frameworks have shifted. Spain’s updated Baremo is a case in point.

A raft of European legal reforms compounds matters, and reinsurers are rightly on alert. Roder highlighted three. The revised product liability directive extends the definition of a product to include software and AI and reverses the burden of proof. The directive on representative actions will widen access to justice. Then there are early, but significant and overdue, talks around regulating third-party litigation funding.

US tactics seep in — but Europe differs

Still, the cultural shift in litigation might be the most telling. Swiss Re recently surveyed 2,000 people across the UK and Germany and found while most are willing to seek compensation or join class actions, “the levels people are seeking are anchored to the actual loss, not to a punitive component”.

But warning signs are flashing. “There are definitely elements starting to appear in Europe. Third-party litigation funding, we see more coordination in collective actions,” he said. “We’re seeing US law firms setting up in Europe and importing their tactics.”

The UK, Netherlands, Italy and Portugal are the current hotspots. But Roder added “Europe is clearly different. We have no punitive damages, judges determine compensation, legal advertising is limited, and the loser usually pays. We don’t expect the same extremes as in the US.”

The industry’s task, he said, is threefold: “Create awareness, assess what it means for different countries and industries then manage them.” Managing means disciplined underwriting, sub-limits where needed and a sober approach to pricing, particularly as bodily injury severities and care costs outpace the Consumer Price Index (CPI).

“Let’s not use CPI as a trend for bodily injury claims,” he insisted. “Wages might be more appropriate.”

For Swiss Re, data backs this stance. Its latest report on the motor bodily injury landscape in 2025 confirms that “serious bodily injury severities continue to rise, mainly because of care costs and medical inflation”. That must feed directly into costing, reserving and capital models if portfolios are to remain resilient.

Roder concluded: “What clients want is a stable, well-capitalised, reliable reinsurance sector.” In a world of creeping liabilities and imported volatility, that stability may prove the most valuable protection of all.

Patrick Roder is head of casualty underwriting, EMEA, at Swiss Re.

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