State of the Commercial Insurance Marketplace

Faced with a rapidly changing commercial insurance marketplace, both carriers and businesses, including employers, public entities and the middle market, are all struggling to understand the economic implications and what risks to prepare for, so we asked Safety National’s CEO, Mark Wilhelm, to share his outlook.

Marketplace Challenges

From a carrier’s perspective, we have not faced this much uncertainty since the 9/11 terrorist attacks. Perhaps, there is even more uncertainty. To put it in perspective, the pandemic has killed almost 700,000 people versus terrorist attacks that have killed about 3,000 people.

As the courts reopen, lawsuits will abound, and the rise of litigation funding used by the plaintiff’s bar will continue to create significant challenges for employers. Virtually every line of business was affected by social inflation or climate change before the pandemic, and COVID-19 will certainly exacerbate those lawsuits. We have yet to see if social inflation is transitory in the long term and whether it will continue to bear a major impact.

Rising medical costs could likely increase workers’ compensation rates creating uncertainty for underwriters and actuaries trying to set rates and predict profitability. The severity of claims and advances in medical technology could also drive rate increases for primary workers’ compensation.

Emerging Issues

It will take years to evaluate and assess the actual weight of COVID-19’s impact on the market. Safety National, alone, has around 600 reported death claims from employees in essential industries. The added complications of presumption laws only further the shifting regulatory landscape. New legislation around vaccine mandates is also creating an increased responsibility for the industry as employees consider litigation.

Additionally, public entities face risks from sexual abuse, police excess of force and cyber immunities under attack. Other lines of business, including business interruption, event cancelation, cyber, errors and omissions (E&O) and directors and officers (D&O) liability, are contending with the risks of increased tort funding.