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Prepare for higher premiums as claims costs soar

Global Administrator

Rising claims loss costs fueled by economy

The economy is a relevant factor in rising claims loss costs, according to property and casualty claims officers surveyed by Tower Watson.
The poor economy seems to have stimulated third-party losses, and a number of survey respondents reported increases in general liability and personal auto litigation, says the fourth installment of Tower Watson's The Economic Landscape and Operational Performance Metrics Bulletin.
Fifty-two per cent of the 52 claims officers surveyed reported an increase in frequency of homeowner claims, the report says. In addition, 42% reported an increase in frequency of personal auto claims.
Personal lines point to increasing frequency and severity with "clearly adverse pure premium implications," the survey of 52 claim officers finds.
Thirty-four per cent reported an increase in the severity of homeowner claims, while 22% reported an increase in the severity of personal auto claims.
"Interestingly, responses related to claim impacts from the economy were relatively consistent regardless of carrier size and market segment," according to the report. "There were clear differences, however, based on line of business.
"Significantly, personal lines recorded higher incidence than commercial coverages in every adverse cost indicator."

From – The Canadian Underwriter

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