OLDWICK, N.J.--(BUSINESS WIRE)--In this special A.M.BestTV episode, insurance industry experts, modelers and government officials examine the mix of litigation, legislative initiatives and governmental interventions that have changed the rules for many worldwide disaster claims. Click on http://www.ambest.com/v.asp?v=longtail2018 to view the entire program.
Rising property values and a greater concentration of people in catastrophe prone areas have increased the cost insurers have to pay to recover from natural disasters.
“Catastrophe insurance is becoming more long tail,” said Robert Muir-Wood, chief research officer, Risk Management Solutions. “Increasingly, events, especially some of the largest catastrophes where losses just keep rising and rising long after the events occurred, are causing catastrophe insurance to become long tail.”
Robert Hartwig, director, department of finance, University of South Carolina, said he believes that this trend is problematic for insurers pricing property catastrophe and property business in general. “Insurers make the assumption that these claims are going to be filed and closed relatively quickly,” said Hartwig. “That becomes increasingly impossible as catastrophe insurance becomes long tail.”
All participants agreed that in order to price insurance products appropriately, certainty is needed. Without it, they said, the industry has to price products according to the worst common denominator, which can result in unnecessary costs to insurers and consumers.
Also appearing in this episode:
- David Sampson, president and chief executive officer, Property Casualty Insurers Association of America;
- Steven Weisbart, senior vice president and chief economist, Insurance Information Institute;
- Fred Karlinsky, co-chair, insurance regulatory & transactions practice, Greenberg Traurig, LLP;
- Sean Shaw, lawyer, property insurance claims, Merlin Law Group; and
- Christopher Draghi, financial analyst, A.M. Best.
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