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AM BEST'S MONTHLY INSURANCE MAGAZINE



From the Editor’s Desk
Shock Verdicts Focus Insurers’ Attention

Third-party litigation funding and escalating jury awards are driving up claims costs for insurers. The March issue also includes coverage of asset management and an interview with the top executive of the National Flood Insurance Program.
  • Patricia Vowinkel
  • March 2022
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It's not quite an 1980s-style liability crisis … yet. But soaring jury awards and shock verdicts have insurers worried. As claims costs and premiums rise, insurers have been speaking up about the issue, campaigning for tort reform and discussing the impact of increasingly sophisticated litigation funding programs.

In “Shock Verdicts: Insurers Sound the Alarm as Billion-Dollar Jury Awards Drive Up Claims Costs,” Best's Review spoke with insurers and legal experts about recent developments and the impact on the insurance market.

“There is little awareness of the costs to consumers and insurance customers of the rising costs of social inflation,” said Thomas Holzheu, chief economist Americas, Swiss Re.

Litigation funding has been identified as one reason for the increasingly litigious environment.

For more about third-party litigation funding, see “Insurers: Third-Party Litigation Is Fueling Rise in Shock Verdicts.”

In “Mortality Trends Raise Underwriting Questions for Life Insurers,” Best's Review examines how mortality numbers are raising questions for the industry. “The third quarter was a rough quarter, extraordinarily rough for certain demographics,” said Tim Bischof, chief actuary at OneAmerica. “The fourth quarter wasn't exactly a reprieve. The fourth quarter was better overall, but it wasn't a whole lot better.”

In “NFIP Executive: We Want To Continue To Work With Private Sector After Disasters,” Best's Review spoke with David Maurstad, deputy associate administrator for federal insurance and mitigation and senior executive of the National Flood Insurance Program, about the NFIP's Risk Rating 2.0 methodology and efforts to work with the private sector.

Delegated Underwriting Authority Enterprises (DUAEs), such as MGAs and coverholders have proliferated in the last few years. AM Best released a new performance assessment for DUAEs, which provides a framework for differentiating among delegated underwriting authority enterprises.

“AM Best believes DUAEs are an increasingly important part of the insurance ecosystem, with a higher proportion of insurance revenue being generated through DUAEs in many global regions,” said Matthew Mosher, president and CEO of AM Best Rating Services.

Andrea Keenan, EVP and chief strategy officer, and Greg Williams, senior director, discuss the new type of non-credit opinion in “AM Best: New Performance Assessment Provides Tool for Differentiating Among DUAEs.”


Patricia Vowinkel, Executive Editor, patricia.vowinkel@ambest.com



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