Premium Increases: A Multiheaded Beast

Despite handwringing over the availability and rising cost of insurance, premium increases aren’t even keeping up with the rate of inflation, according to Eric Goldberg, an attorney and department vice president of commercial lines for the American Property Casualty Insurance Association, an organization that represents insurers. “Insurance is not a source of inflation but a reflection of it,” Goldberg told a crowd of commercial practitioners at the REALTORS® Legislative Meetings in Washington, D.C., in May.

Of course, inflation is just one of the factors behind today’s insurability challenges, he said. Goldberg pointed to troubling legal trends—including jury anchoring, in which plaintiffs’ attorneys request excessive awards, and third-party litigation financing by those who approach the courts as an investment opportunity—that are creating losses for insurers.

Other factors include climate change, the increase in exposure values for buildings in hazard-prone areas, the cost of reinsurance, office vacancy rates, and ESG activism. On a positive note, Goldberg said, the insurance industry is taking an active role in the effort to make areas more resilient and mitigate risks.

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