Bill McElroy Addresses Social Inflation and Litigation Challenges
Social inflation negatively impacts both customers and commerce, as it drives up premiums for everyone, and for many, these costs have become unsustainable. Bill McElroy,...
It’s easy to make predictions about future market conditions, whether they come to pass or not. But with history as a guide, a series of factors are combining to suggest that liability reinsurance will be less available and more expensive by 2026. Carrier Management Reporter, Russ Banham, recently spoke with Beatrice Morley, Aspen Re Global Head of Casualty and Head of International, for a feature story appearing in the magazine’s Q3 2024 issue.
In the article, he spoke with leaders from major reinsurers and reinsurance brokerage firms and, although no one is forecasting a liability reinsurance crisis in two years, there are several market factors that are causing industry experts to look more carefully. Among those factors include a higher than expected adverse loss development during the soft market period, an insufficient market correction in 2020-2022, uncertainty over liability for PFAS and PFOS and the rise in nuclear verdicts, just to name a few.
Despite double-digit rate increases the past four years on many liability lines, loss trends continue to creep up, said Morley. “2020 to 2022 was an extremely hard market for casualty, [generating] rate increases and tightened terms and conditions that some people in their careers had never seen before,” she said. “We’ve had four years of the rate increases now, but loss trends have not gone down.” She held up her hands during the interview to describe two rising planes, one ascending at a higher slope than the other. “The rates are going this way, but the loss trends are going at a sharper incline,” she said. “The question is, ‘How long will this continue?’”
Read more about Bea’s insights on where liability reinsurance is headed and what she and other top industry executives are saying in this feature article. Is Liability Reinsurance Headed for a Tumble? (carriermanagement.com)