MARKET OUTLOOK
THE FIRMING CASUALTY MARKET IS A RESULT OF DETERIORATING LOSS TRENDS DUE TO AN UNPRECEDENTED NUMBER OF MASSIVE CLAIMS . needs to be restructured in lieu of working with the incumbent insurance company on the renewal pricing based on the same layered structure . This often involves introducing new insurance companies , reaching out to additional markets to get the most competitive terms , and pricing to structure the placement . In addition , COVID-19 has put additional pressure on the need for rate adequacy . Insurers and reinsurers are experiencing a near-zero interest rate environment and are unable to offset underwriting losses with investment income . Poor results are forcing carriers to remain committed to higher rates . Carriers are also adding pandemic exclusions to primary and excess policies moving forward .
WHAT ’ S DRIVING THE MARKET ?
The firming casualty market is a result of deteriorating loss trends due to an unprecedented number of massive claims . Catastrophic liability losses stemmed from automobile accidents , active shooter events , personal injury lawsuits , construction defect claims , opioid casualties , sexual assault and molestation claims , and wildfire litigation , resulting in unsustainable loss ratios and insurance companies looking to obtain adequate rates . “ Nuclear ” verdicts driven by social inflation , for example , have hit $ 250 million-plus in high-profile cases , driven by an aggressive plaintiffs ’ bar , litigation funding , and sympathetic juries with anticorporate sentiments .
The commercial auto liability market has predominately been responsible for cutting into insurance company profitability and driving up excess rates . According to data collected by Advisen , between 2016 and 2019 , the number of catastrophic auto liability claims ( characterized as having a reported cost of $ 15 million or greater ) increased 87 percent . In response , insurance companies have exited some markets , overhauled their books of business to meet stricter underwriting guidelines , or made adjustments to pricing and coverage terms to reflect their exposures and prepare for future losses . Insureds with an auto exposure are facing higher primary auto liability rates and subsequently higher excess rates , with the excess more difficult to place due to fewer insurance companies offering policies .
COVID-19 IMPACT ON INSURANCE
Legal professionals overwhelmingly cite employment liability as the biggest legal risk insurance companies are facing related to the global health crisis , with many readying themselves for employment litigation they believe is in the pipeline . There are a lot of rules that come at employers from a lot of different angles , and it takes a lot of effort to get it right . Even when employers do get it right , unfortunately there are employees who are going to sue anyway . Employment issues are always a disproportionately large portion of the risk in any organization , but that is especially true in a situation where so many people have been furloughed or laid off . New types of grievances may emerge . Employers are concerned that employees who are desperate might be looking for ways to file claims . Plaintiffs ’ lawyers have become very creative in looking for ways to come up with new claims with so many people out of work .
The availability of a vaccine will present new challenges for businesses and new benefits and risks to balance . Some employees might be unhappy if there is a mandate that employees must get a vaccine . Some employees , quite the opposite , may be unhappy if there isn ’ t a mandate because they want to make sure everyone around them is vaccinated . Employers most likely will be able to require their staff to get vaccinated barring any prohibition in state or local laws . Company leaders will need to make sure they ’ re also evaluating special circumstances , such as laws and regulations covering disability and religious bias . +
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