High natural disaster losses and persistent inflation have conspired to create one of the hardest insurance markets in a generation, according to a recent report from a leading insurer trade group, but experts stress the industry as a whole remains well capitalized.…
The APCIA report also cited "social inflation" — an industry term for rising claims and legal costs — as a contributor to hard market conditions. However, a recent report from the Consumer Federation of America and Center for Justice Democracy at New York Law School described that kind of inflation as an industry "invention."
Joanne Doroshow, the founder and director of the Center for Justice Democracy, told Law360 that the insurance industry was sitting on "obscene" amounts of money, and said meaningful reforms would include better rate regulation and public disclosure laws. Insurance commissioners should be elected and able to kill unjustified rate hikes, she said.
"For most Americans who do not pay close attention to insurance markets, it is easy to be misled by this industry when it tries to justify rate hikes and arbitrary policy cancellations after years of stability," she said. "The current hard market began in 2019, before inflationary pressures, and following many severe weather events that for years had no impact on rates or capacity because the prior soft market was still in effect."
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