Consumer groups critical of commercial insurers’ rate-hike blame

Reiterating charges largely previously made in a 2020 report, two consumer organizations are charging commercial insurers with falsely blaming social inflation for the “massive” premium increases they are charging.

An Insurance Information Institute spokesman said in a statement the organizations are wrong to claim there is no connection between litigation and insurance costs.

In March 2020, the Washington, D.C.-based Consumer Federation of America and the Center for Justice & Democracy at New York Law School said in a report that the insurance industry had created a “fake” crisis allegedly generated by high jury awards, although it was enjoying a record surplus. The report was criticized at the time by insurance organizations.

The latest report, which frequently cites the earlier one, says, “As part of their narrative, industry leaders publicly spin the notion that the industry is financially beleaguered and cannot pay claims without significant raising rates.”

“It is a narrative used not only to push for a cycle turn, but also to maintain rate hikes for the entirety of a three-to-four-year hard market, which we are still in but nearing the end of today,” it states.

The III responded in a statement, “Anyone who believes there is no connection between litigation and insurance costs should examine either Florida’s homeowners insurance market or the inflated claims payouts U.S. commercial auto insurers have incurred over the past decade.”

In discussing the commercial auto market, the statement said III and the Casualty Actuarial Society “found U.S. commercial auto insurers paid out $30 billion more than would otherwise be anticipated dating back to the early 2010s in part because of excessive litigation and extraordinarily expensive jury verdicts.”