Risk Services Of Arkansas - August 2021

Risk Services Of Arkansas - August 2021

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6 REASONS THE INSURANCE MARKET IS GOING CRAZY RIGHT NOW

their assets and smooth out claims payments, the global insurance and reinsurance marketplace has become more interconnected. Tsunamis in Southeast Asia can drive up insurance costs just as easily as hurricanes in Louisiana or tornadoes in Oklahoma. Liability verdicts are getting more expensive. The damages that businesses have to pay out for automobile and trucking accidents, medical malpractice, product liability, and other types of liability- related lawsuits have all gone up in recent years, some dramatically. Legal teams are able to use modern communication technology to better coordinate class action lawsuits, highly organized plaintiffs are now being financed with third-party capital, and the anti-corporate sentiment among jurors are a few of the main factors leading to nuclear verdicts that suck big money right out of the system. And when insurers have to pay out an enormous settlement, those losses filter through the system to ultimately raise prices for everyone else. Risk-free interest rates are almost zero. The interest paid on risk-free government bonds is virtually nonexistent, which means insurance companies have to make up for the lost income from their investment portfolio with underwriting profits, meaning they’ll price their products more aggressively. This has been going on for years. The pandemic shook up the >Page 1 Page 2 Page 3 Page 4

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