Aon | Professional Services Practice
Recessions vs. Professional Liability Claims Experience – A Look at the Data
Release Date: February 2026Anytime there is even a modest chance of recession in the U.S., professional liability insurance underwriters evaluate the risk environment while pricing policies and typically consider this question: to what extent do recessions impact the risk in the professional liability claims environment?
Key Takeaways
- Professional liability claims are associated with periods of economic instability, like recessions
- Economic recessions could lead to significant increases in corporate bankruptcies, resulting in financial loss, and therefore increased risk of ligation against professional services firms such as accountants, law firms and consultants
- PSP reviews this correlation using 40+ years of data on professional liability claims for U.S. law firms, accountants and consultants
Aon’s Study
The relationship between recessions and professional liability claims activity is difficult to quantify due to the inherently volatile nature of professional liability claims as a long-tailed, low frequency, high severity line of insurance.
However, Aon has an extensive database 40+ years of professional liability claims experience for U.S. law firms, accountants and consultants that we utilized to conduct a study on the relationship between recessions and claims.
Figure 1 depicts the results of the study. We plotted the ground-up incurred (paid and reserves) for professional liability claims by policy year, expressed as a percentage of a 7-year moving average and compared this to U.S. recession years, shaded in grey. A recession year is identified by two consecutive quarters of GDP decline.
U.S. Professional Liability Claims Policy Year Incurred vs. Recessions
Policy Year Incurred Excess of 7-Year Central Moving Average
Source: Aon Professional Services Practice - 2025 Internal Analysis of Professional Indemnity matters aggregating US law firms, US Accountants, and Consultants
Observations
The study shows that some recessions years, such as 2001, 2008, and 2009, coincide with significantly elevated claims activity. However, to date, we have not seen the pandemic recession of 2020 result in an uptick in claims activity for that policy year. We caution that claims data in more recent policy years may take years to fully develop and settle.
Overall, we observe that 43% of recession years (3 out of 7 years) result in significantly above average claims activity. However, there are policy years with spikes in claims activity – 1988, 1997, 2018 – which do not coincide with recession years.
Therefore, although there is some correlation between recessions and professional indemnity claims activity, there is no strict rule that a recession will invariably result in elevated claims activity.
Contact
The Professional Services Practice at Aon values your feedback. To discuss any of the topics raised in this article, please contact Henry Lim or Ivy Zhou or Brandon Park.
Henry Lim
Managing Director
Montreal
Ivy Zhou
Assistant Vice President and Associate Director
Montreal
Brandon Park
Actuarial - Data Analytics Associate
Montreal
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