State Litigation Reforms Support Sustained Insurer Margins

Goldman Sachs analyzes how litigation reforms in 31 U.S. states will drive significant loss ratio improvements for Property & Casualty insurers, leading to a projected 4% average EPS benefit over 2026-2028.

Key Takeaways

• 1.Recent litigation reforms in 31 U.S. states represent 55% of industry premiums and are expected to significantly support underwriting margins over the next several years.
• 2.The industry could see a cumulative benefit of ~2pp in Personal lines and ~1pp in Commercial lines loss ratios, primarily driven by 14 states with comprehensive or incremental reforms.
• 3.Improved underwriting margins will likely lead to second-order deflationary pressures on pricing and premium growth as benefits are passed on to policyholders.

Table of Contents

• Takeaways & Implications
• EPS Estimate Changes
• Estimating the Impact
• Details on Our Approach to the Analysis
• Reform Timeline Detail
• Reform Impacts in Florida
• Valuation & Key Risks

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