Industry Authority Update Provides Trends, Answers and a Look to the Future
By James Barr, Vice President
We’ve previously discussed that the commercial insurance markets are experiencing inflation like just about every other sector in the economy, with many different drivers — some intuitive and predictable, with others less reported upon.
The graphic below highlights a contributing factor that might be new to many: something called third-party litigation funds, or TPLF. What has now become a $17 billion market, TPLF are emerging in response to increasingly high costs of litigation, as illustrated by the recent jury verdicts — to the tune of billions of dollars (see box in yellow at bottom left).
Other industry trends driving inflationary pressures on insurance premiums include things we’ve covered in the past, including:
Ongoing Inflation. As noted in a prior article, soaring material and labor costs continue to have a dramatic effect on replacement costs.
The High Cost of Major Catastrophes. Hurricane Ian, which will ultimately cost the insurance industry an estimated $50 billion to $65 billion, is one of the largest disasters in U.S. history.