Q3 Claims Trends
The Impact Of Underinsurance Is Material
Inflation and other economic issues have combined to create significant underinsurance risk. Asset values in many classes, and indemnity periods in business interruption, are proving to be insufficient, leading to longer, more challenging claims adjustment processes and lower than ideal settlement values. Underinsurance can arise from errors, complacency or intentional decisions. Whatever the backdrop, the resultant claim challenge is real and material. Margin and average clauses in policies present specific risk and the need for documentation on all discussions and decisions related to values has never been greater.
Cyber Losses Continue to Increase in Frequency
The market continues to experience an increase in the frequency and severity of ransomware attacks across all sectors, and an increase in data protection litigation following the introduction of GDPR/GPA in 2018. We observe less flexibility from insurers in such cases, with more stringent application of claims conditions. Loss of protected data, business email compromise (BEC), payment diversion fraud (PDF) via social engineering and distributed denial of services attack (DDOS) matters are also bringing increased claim activity.
Fiona & Ian Reinforce The Need For Claims Strategy
Hurricanes Fiona and Ian have served as reminders of the need for pre-claim planning, the need for quality adjusters to be named in policies, the need for sufficient limits for claims preparation clauses and, critically, the need for claims advocacy to begin in the immediate aftermath of a loss event. Claim resolution begins at policy placement, with insurer selection and adjuster nomination critical to future claim success.
Nuclear Verdicts Are Back
Through the COVID period, US courts were closed and attention was focused elsewhere but now we see a return, and in many ways an acceleration, of the nuclear verdict phenomenon in US. Awards are reaching extraordinary levels, driven by aggressive plaintiff lawyers, unregulated litigation funding and what some observers have called activist juries. It is difficult to see the trend reversing as each verdict serves as the new baseline.
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