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Auto Insurance, Risk-Based Pricing

Gender Identity
and Auto Insurance

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By Jeff Dunsavage, Head of Research Publications and Insights, Triple-I

Gender is one of many factors insurers consider when looking at a driver’s risk profile, as permitted or prohibited by state laws and regulations, using the gender indicated on drivers’ licenses.  Twenty-two states currently provide – in addition to “male” and “female” designations – non-binary gender identity options or do not require gender to be listed at all. 

What are the insurance implications, if any and where permissible by state law, of a non-binary gender marker or the absence of any gender marker on a driver’s license? The short answer is that state-by-state differences in the relevant data limit the impact.

State use of gender markers

As of June 2026, 22 states allow an “X” gender marker on state IDs and driver’s licenses, representing 44 percent of the country. Interpreted in some states as a “not specified” gender, the X marker is widely regarded as a gender-neutral option for those who are not exclusively male (“M”) or female (“F”), which may include trans, nonbinary, and/or intersex individuals. Oregon became the first state to authorize the designation in 2017, following in the footsteps of similar laws in several other countries. 

Within states that offer X markers, residents may update their gender marker to F, M, or X with varying degrees of ease, depending on state process requirements. Residents outside these states are limited to F or M designations, with gender marker corrections on state IDs and driver’s licenses altogether prohibited in at least eight states. 

By population, 51 percent of trans adults live in states that allow these F, M, or X marker updates. Twenty-two percent live in states that bar these changes, according to estimates from the Movement Advancement Project. This figure could grow as legislation restricting the legal recognition and rights of trans people ramps up across the country, with nearly 800 such bills under consideration so far this year, 60 of which have passed. More than one thousand were considered in 2025, marking the sixth consecutive record-breaking year for such proposals. 

Risk-based pricing

“Risk-based pricing” is a basic insurance concept that might seem intuitively obvious when described – yet misunderstandings about it frequently sow confusion. Simply put, it means offering different prices for the same level of coverage, based on risk factors specific to the insured person or property. If policies were not priced this way – if, for example, insurers had to come up with a one-size-fits-all price for auto coverage that didn’t consider vehicle type and use, where and how much the car will be driven, and so forth – lower-risk drivers would subsidize riskier ones. 

Little uniform data currently exists, however, on accident trends among trans and nonbinary drivers. As a result, it’s unclear whether or how rates might be affected for those with an X gender marker or for those without an updated gender marker of any kind. 

Telematics can help

A 2021 article from the National Association of Insurance Commissioners’ (NAIC) Journal of Insurance Regulation, as well as a 2024 Casualty Actuarial Society (CAS) study, point to the promise offered by telematics and usage-based technologies. The NAIC Journal article recommends abandoning gender as a rating factor, arguing that “technology has advanced the opportunity to more directly measure actual driving behavior and exposure through other predictors.”  The CAS study suggests telematics can “significantly reduce the need to include age, sex, and marital status in the claims frequency and severity models.” 

While acknowledging “not all of the sensitive variables we tested could be eliminated from the model,” the CAS study went on to say, “The analysis shows there is still value in insurers testing the addition of telematics to their models to potentially reduce reliance on sensitive information that could result in actual or perceived bias.”

Commitment to fairness

Fair, accurate pricing and underwriting are at the heart of the risk-based approach, and property/casualty insurance industry is committed to ensuring fairness and promoting trust across all the communities it serves. Insurers and the actuaries and data scientists that support them are well positioned to continue helping policymakers and decisionmakers understand the complex science of risk and play a constructive role in the policy discussion.

Learn More: 

LGBTQIA+ Homeownership Gap May Be Fueling Insurance Protection Gap 

Diversity and Inclusion in the Insurance Industry 

Clarifying Drivers of Rising Auto Premiums 

Allstate, Aspen Initiative Seeks to Ease Trust Gap 

Human Needs Drive Insurance and Should Drive Tech Solutions 

 Triple-I Issues Brief: Risk-Based Pricing of Insurance (Members only content)

Auto Insurance, Industry Financials, Market Conditions

Personal Auto Insurance Rebounds After Years
of Pandemic Volatility

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By William Nibbelin, Head of Industry Data and Actuarial Research, Triple-I

The U.S. personal auto insurance market achieved its strongest underwriting performance of the post-pandemic era in 2025, recording a net combined ratio of 91.8. According to Triple-I’s latest Issues Brief, this marked a significant improvement from the line’s 95.3 ratio in 2024, signaling a welcome return to profitability for a sector that commands more than a third of the entire domestic property and casualty insurance industry.

Combined ratio is the most common measure of insurer underwriting profitability. It is calculated by dividing the sum of the claim-related losses and expenses by premium. A ratio over 100 indicates the industry is paying out more than it is taking in.

Premium growth stabilizes

The road to this recovery required substantial rate adjustments. Following the pandemic, the auto insurance market experienced two back-to-back years of double-digit premium growth, climbing by 14.4 percent in 2023 and 12.8 percent in 2024. These hikes allowed insurers to keep pace with skyrocketing inflation and supply-chain disruptions.

In 2025, however, net premium growth cooled to a manageable 4.0 percent, landing just below the broader industry average. This deceleration indicates rates are finally settling as the macroeconomic forces that previously drove up costs begin to ease, particularly vehicle replacement and repair costs.

For the first time since 2019, key economic indicators—such as the Consumer Price Index for used cars, new vehicles, and automotive parts—recorded notable decreases over the 2023 to2024 period. Because insurer rate adjustments historically mirror vehicle pricing trends with a slight time lag, the drop in costs has helped pave the way for a calmer pricing environment.

Auto liability severity gap expands

While overall loss ratios have improved from their late-2022 peak, recovery has not been uniform across all types of auto coverage. The industry has experienced a widening gap between physical damage claims (covering vehicle repairs) and liability claims (covering injuries and legal costs).

Repairing physical damage has become significantly more efficient as supply chains normalized, causing loss ratios in that segment to drop sharply. In fact, by 2025, the cost index for physical damage dipped below its 2022 level, aided by a steady drop in overall claim frequency.

Auto liability has proven far more stubborn. Though accident frequency remains below pre-pandemic baselines, the average financial severity of liability claims has surged. Between 2019 and 2025, the average cost per liability claim jumped by 67.5 points. As a result, the financial gap between resolving a physical damage claim versus a liability claim reached a ten-year high by the end of 2025.

Market options

Market competition determines how many choices consumers have when shopping for a policy. On a nationwide scale, the personal auto market sits in a moderately concentrated zone, though it has become noticeably tighter since 2022 as larger carriers expanded their footprint.

On a state level, drivers in Rhode Island, Louisiana, Arkansas, and the District of Columbia face the most consolidated markets, where a handful of dominant carriers handle the bulk of the business. Conversely, Connecticut, Massachusetts, and California boast the least concentration and the most choices among carriers.

Legal system abuse remains a roadblock

While vehicle prices have leveled off, legal system abuse continues to be a major cost driver, especially for auto liability. This trend includes a rise in aggressive litigation, attorney involvement, and exceptionally large jury payouts generated by third-party litigation funding networks.

A study by Triple-I and the Casualty Actuarial Society revealed that these legal tactics inflated auto liability losses and defense costs by an estimated $91.6 billion to $102.3 billion over a ten-year period ending in 2024. This form of inflation is detached from the tangible economy, representing a systemic cost that ultimately impacts consumer premiums.

Fortunately, states like Florida, Georgia, and Louisiana have recently enacted meaningful legislative reforms designed to curb legal system abuse, which have already begun yielding positive results. While the specific policy levers may differ, their efforts demonstrate the kinds of targeted statutory changes that can effectively lower legal overhead and bring pricing relief back to policyholders nationwide.

Learn More:

Clarifying Drivers of Rising Auto Premiums

U.S. P/C Market Records Hard-Earned Decade-Low Combined Ratio

Florida Reforms Drive Benefits for Consumers

States Take the Lead on Third-Party Litigation Funding Reform

Oil Prices Might Reduce Accidents, But Severity Would Offset Impact

Legal System Abuse Awareness Campaign Spreads Across U.S.

Insurers and the Economy, Legal Environment

North Carolina Becomes First State to Ban Third-Party Litigation Funding

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By Lewis Nibbelin, Research Writer, Triple-I

North Carolina has enacted a measure to ban third-party litigation funding, the first of its kind in the country amid nationwide efforts to rein in the practice.

Signed into law on Monday after near-unanimous support in the state legislature, the Prohibit Litigation Investments Act makes it “unlawful for a person to engage in litigation investment” or “to furnish litigation investment to a party or counsel of record in a civil proceeding” in the state. Exclusions to the law include contingency-fee arrangements, insurer indemnification or defense obligations, pro bono funding from nonprofit organizations, and other forms of financing not contingent on suit outcomes.

“For too long, dark money has supported the legal system abuse tactics of billboard attorneys, funding an excessive volume of lawsuits through largely undisclosed arrangements,” said Triple-I CEO Sean Kevelighan. “Greater transparency helps shine a light on these financial interests and addresses practices that can contribute to legal system abuse, drive up claim costs, and ultimately increase insurance premiums for consumers and businesses.”

TPLF occurs when outside investors profit from lawsuits by paying legal costs in exchange for a share of the settlement or judgment if the suit wins. In practice, this encourages prolonged and unnecessary cases and can culminate in extreme nuclear verdicts of $10 million or more. TPLF contributes to the $6,664 in added annual costs for the average American household through excess litigation.

States diverge on nonlawyer involvement

North Carolina’s new law is the latest in a wave of TPLF-related legislation building on a record number of bills introduced nationally last year to improve TPLF transparency. While many states have continued to focus on disclosure, some are targeting alternative business structures and nonlawyer-owned law firms as sources of undue courtroom friction.

Colorado, for instance, recently passed a law that prohibits legal fee or revenue sharing with outside investors and increases restrictions on ownership. Both it and a 2025 measure regulating foreign TPLF agreements were backed by a coalition that included the Colorado Trial Lawyers Association, a partnership the organization explained is aligned with their shared interest in upholding the integrity of the legal system.

Similar bills are moving through the California and Illinois state legislatures, each of which have also received support from several state bar associations. Triple-I expanded its legal system awareness campaign in both states earlier this year to help demonstrate the link between their insurance affordability struggles and legal system abuse.

Emerging challenges to nonlawyer ownership and investments contrast from regulatory changes in recent years that expanded these practices in some states. In 2020, Utah launched the nation’s first regulatory “sandbox” permitting nontraditional legal service providers who operate under the supervision of the state supreme court, including firms invested in and/or owned by nonlawyers. That same year, Arizona repealed its rule barring nonlawyer fee sharing and ownership, later unveiling its own program in 2021 to facilitate alternative business structure arrangements.

As policymakers seek ways to protect consumers from rising costs, it’s important to learn from states that are succeeding. Florida has a long history of problems caused by insurance fraud and litigation abuse that contributed to upward pressure on insurance rates. Recent reforms to check these practices have made the Sunshine State a national model for the kinds of market improvements states can expect through tort legislation.

By limiting third-party investor influence in litigation, North Carolina and Colorado may soon serve as additional blueprints to address the root causes of rising costs, rather than merely treating the symptoms.

Learn More:

How AI Helps Insurers Combat Fraud, Legal System Abuse

States Take the Lead on Third-Party Litigation Funding Reform

Legal System Abuse Awareness Campaign Spreads Across U.S.

Florida Premiums Drop Amid Post-Reform Stability

New Consumer Guide Highlights Economic Impact of Legal System Abuse and the Need for Reform

Affordability, Homeowners Insurance, Insurers and the Economy, Legal Environment, Roof Condition, Severe Convective Storm

Storms, Inflation, Fraud Fuel Rising Homeowners Rates for Oklahomans

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By Jeff Dunsavage, Head of Research Publications and Insights, Triple-I

Oklahoma homeowners insurance premiums are escalating due to a range of factors. A new Triple-I Policy Brief discusses the drivers of this trend and cautions state legislators to make sure any attempts to contain these rising costs target its underlying causes.

“Because insurance is integral to the total cost of homeownership, lawmakers often find themselves under pressure from constituents to rein in premiums,” the brief says. “Unfortunately, their efforts often lead to policies that would hurt consumers, rather than help them. It is important for policymakers to understand the causes of premium increases and to let that understanding inform decision making.”

Oklahoma is among the least affordable states for home insurance coverage (ranked 48th, with 3.45% of household income spent), according to data from the Insurance Research Council (IRC). IRC, like Triple-I, is an affiliate of The Institutes.

Rising costs of materials and labor to repair and replace damaged or lost property have been major drivers of increasing premium rates. Legal system abuse and claims fraud also play a substantial role in rising rates nationally. Roof replacement fraud is a rapidly worsening problem nationally, according to the National Insurance Crime Bureau (NICB), and the Oklahoma attorney general’s office has called roofing scams “the most common complaint submitted by consumers.”

Following particularly severe weather in April, the attorney general warned Oklahomans to be vigilant of contractor fraud.

“In the aftermath of severe weather, scammers often target vulnerable homeowners trying to recover and rebuild,” said Attorney General Gentner Drummond. “While it is natural to want to make repairs quickly, taking the time to choose a reputable contractor is critical to protecting your home and finances.”

While it may be politically tempting to address a state’s affordability issues by imposing more regulatory constraints on insurers Triple-I warns that states that have tried such approaches have shown they are neither effective nor sustainable.

For Oklahoma, addressing the severity of weather-related claims is key to moderating rate increases. Risk management programs like Strengthen Oklahoma Homes – which provides grants to Oklahoma residents for residential wind and hail mitigation on new and existing, owner-occupied, primary residence single-family homes – is a great start. Modeling the success of the Strengthen Alabama Homes initiative, funding for Oklahoma’s program comes from the insurance industry and is not funded by the state’s general budget.

“The property/casualty insurance industry is an essential partner in addressing states’ affordability crises,” the Triple-I brief says. “States that work with the industry can expect more effective, more sustainable results than those that only attack the symptoms instead of the underlying cost drivers.”

Learn More:

Contractor Fraud After Disaster: A Persistent Challenge in the Recovery Process

Convective Storm Losses: Historic 3-Year Streak

Legal System Abuse Awareness Campaign Spreads Across U.S.

Illinois Storms Highlight Severe Weather Losses

Mississippi Set to Launch Roof Grant Program

Storm-Resistant Roof Efforts Gain Ground

Disasters, Litigation Reshape Homeowners’ Insurance Affordability

Affordability, Auto Insurance, Highway Safety, Insurers and the Economy, Legal Environment, Technology

Clarifying Drivers of Rising Auto Premiums

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By Lewis Nibbelin, Research Writer, Triple-I

Personal auto insurance premiums represent multiple aspects of the affordability crisis U.S. consumers face today, and a panel discussion at the Brookings Center on Regulation and Markets this week helped define and clarify them.

Panel moderator Aaron Klein, Miriam K. Carliner Chair and senior fellow in Economic Studies at the Brookings Institution, began the discussion by acknowledging “the rising rates of car insurance are part of the broader set of topics that have been given the term ‘affordability.’”

Representing insurers, regulators, and consumers, the panelists included Sean Kevelighan, CEO of Triple-I; Justin Zimmerman, a former commissioner in New Jersey’s Department of Banking and Insurance; and Chuck Bell, programs director for advocacy at Consumer Reports.

All agreed that much of the blame for rising rates can be attributed to external factors such as the costs associated with safer, more technologically sophisticated vehicles, thereby raising the costs to repair and replace them. Inflation has exacerbated these impacts, with auto replacement costs up 28 percent from 2021 to 2025. Over the past 12 months, inflation increased 4.2 percent, thanks in large part to geopolitical risks, supply-chain disruptions, and rising oil prices.

Disagreement surfaced, however, around the degree of insurance-industry responsibility for insurance costs. Consumer Reports’ Chuck Bell suggested the $14 billion insurers issued in rebates to consumers during the COVID-19 pandemic was insufficient, prompting Kevelighan to point out that, “of all the refunds being given, you saw the most coming out of the insurance business and community.” Zimmerman noted that many states also froze insurers’ ability to raise rates during the pandemic, leading to some post-pandemic “rate catch-up.”

Rampant legal system abuse helps fuel the strain. While derided as a concept by some, Kevelighan cited analysis from Triple-I and the Casualty Actuarial Society that indicates excessive litigation added up to $281.2 billion in increased liability insurance losses from 2015 to 2024 – a finding that economic inflation alone cannot explain. A separate Triple-I report on civil case filings indicated roughly one-third of increasing inflation in auto liability losses stemmed from these legal trends.

Kevelighan also highlighted the $380 million spent by third-party litigation funders (TPLF) on online advertising last year, according to a study from the National Insurance Crime Bureau and 4WARN. Now “a global multi-billion-dollar asset class,” TPLF has become a target for reform in a growing number of states, notably New York.

New York affordability struggles

Wiping out billions of dollars in U.S. economic activity annually, legal system abuse costs New York residents 427,794 jobs and $7,027 per household per year, contributing to the fourth-highest auto insurance expenditures in the nation, Triple-I estimates. Moreover, the state’s average personal auto injury claim is $46,726, at more than twice the national average.

Building on legislation to tackle TPLF, New York lawmakers recently passed a package of auto insurance reform bills to disincentivize legal system abuse and fraud, one of which will introduce a $100,000 cap on noneconomic damages for drivers who were at fault, uninsured, or impaired at the time of an accident. Comparative negligence rules were also updated to ensure costs cannot be shifted away from the motorists responsible for an accident.

Kaitlin Asrow, New York State’s acting superintendent for the Department of Financial Services, told Klein in an interview before the panel, “Over the last five years, suspicious fraud reports for just no-fault auto increased 80 percent.” She added that “staged accidents were up 34 percent” in New York City alone during the same period.

While further reforms are needed to address the Empire State’s high insurance costs, Kevelighan pointed out that similar efforts in Florida have begun to drive substantial premium reductions and renewed private market competition.

Modifying behavior for risk reduction

Though many influences on insurance costs are structural, Kevelighan emphasized “a lot of this comes down to our behaviors and how we’re driving and living.” As such, insurance must shift from “a once or twice a year type of transaction” to “an open and ongoing conversation” between insurers and their customers.

Part of that conversation revolves around distracted driving, which jumped significantly after the onset of the COVID-19 pandemic and remains at elevated levels. As measured by a recent Nationwide survey, seven in ten commercial drivers have reported experiencing increased distraction as well as reckless driving from other drivers, at a 10-point increase from 2025.

Nationwide also found that commercial auto loss ratios drop by at least 30 percent when policyholders use telematics, a technology that monitors mileage, braking and acceleration, and other driving patterns to provide real-time feedback that can adjust unsafe behavior. In addition, built-in accident-avoidance systems are reducing rear-end collisions by 40 to 50 percent.

Noting telematics research is still in its early stages, Kevelighan said the “interaction and exchange” of risk information between insurers and policyholders “is where the industry is going to start shifting from just detecting and repairing after a catastrophe to predicting and preventing.”

“We’ve got to make sure we’re balancing out what it is that we’re doing to reduce our risk, because that’s the real driver,” Kevelighan explained. “When we reduce the risk, we can reduce the cost.”

Learn More:

N.Y. Natural Catastrophe Exposure Highlights Risk-Based Pricing Benefit

States Take the Lead on Third-Party Litigation Funding Reform

Oil Prices Might Reduce Accidents, But Severity Would Offset Impact

Florida Premiums Drop Amid Post-Reform Stability

New York Among Least Affordable States for Auto Insurance

Triple-I Testifies on New York Insurance Affordability

Revealing Hidden Cost to Consumers of Auto Litigation Inflation

Business Risk, Cyber Risk, Flood Insurance, Floods, Insurers and the Economy

RiskScan 2026 Reveals A More Interconnected Risk Landscape

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By Lewis Nibbelin, Research Writer, Triple-I

Organizations across the insurance value chain are navigating an increasingly complex risk landscape, demanding more integrated approaches to resilience shared among all segments of the property/casualty (P/C) market, according to RiskScan 2026, a new research study from Munich Re US and Triple-I.

Based on survey data from more than 1,700 participants in the United States and United Kingdom, RiskScan 2026 explores risk perceptions and exposures across five key market segments: 

  • P/C insurance carriers,
  • P/C agents and brokers,
  • Middle-market decision makers,
  • Small-business owners, and
  • consumers.

Comprising two in-depth reports, the study builds on the previous RiskScan 2024 and features a new report highlighting global specialty market perspectives and insights.

Across all audiences, cyber incidents, economic pressures, and AI emerged as chief concerns, indicating insurers and their customers are largely aligned on risks reshaping the market. Increasing frequency and severity of natural catastrophes also ranked high, particularly for perils traditionally associated with less catastrophic loss, such as wildfires, flooding, and severe convective storms.

“The real challenge – and opportunity – is in understanding how these forces intersect,” said Sabrina Hart, president and CEO of Munich Re Specialty North America. “A cyber event can trigger operational disruption, a climate event can cascade through supply chains, and legal inflation can magnify losses well beyond the initial event.”

Growing consumer awareness

While knowledge gaps remain, policyholders are becoming more aware of these connections. Consumers and businesses who participated in the 2024 survey, for instance, primarily did not identify legal system abuse as an insurance cost driver – a trend middle-market decision makers and small business owners reversed in the updated study.

Such responses suggest industry stakeholders increasingly recognize the long-term impacts of risks, rather than focus on the short-term disruptions of individual events. Economic conditions play a leading role in this shift as “a multiplier of insurance risk, affecting affordability, claims severity, capital allocation, and long-term market stability across the insurance value chain,” explained Michel Léonard, Triple-I’s chief economist and data scientist.

Flood and cyber take-up still low

Despite growing awareness, consumers continued to express less concern about flood than insurance professionals and businesses, in part reflecting misconceptions about flood risk and policy exclusions and limitations. Many consumers as well as small business owners are unaware that homeowners’ and commercial property insurance do not typically cover flood damage. Consumers may also believe flood coverage is unnecessary unless their mortgage lenders require it or drop their flood insurance coverage once their mortgage is paid off to save money.

Similarly, though all market segments considered cyber incidents a significant concern, the report notes that cyber take-up rates in the small commercial and personal line spaces remain low. Misunderstandings surrounding cyber risk coverage options and benefits help fuel this discrepancy, revealing a gap between insurer perceptions of product value and that of their customers.

“The protection gaps highlighted in this research underscore the urgent need to better educate consumers and businesses,” said Triple-I CEO Sean Kevelighan. “As flood, cyber, and other interconnected exposures continue to evolve, the industry has an important opportunity to strengthen public understanding, close protection gaps, and work collaboratively with consumers, policymakers, businesses, and communities to better predict, prepare, and prevent ever increasing risks.”

Learn More:

Bridging the Cyber Risk Resilience Gap Among Insurance Carriers

Cyber Claim Severity Surges as AI, Litigation Accelerate Risk

Legal System Abuse Awareness Campaign Spreads Across U.S.

Take Care in Addressing Homeowners’ Premiums, Bloomberg Cautions Policymakers

Inflation, Replacement Costs, Climate Losses Shape Homeowners’ Insurance Options

As Global Risks Evolve, So Must Insurance

Affordability, Artificial Intelligence, Legal Environment, Regulation, Technology

How AI Helps Insurers Combat Fraud, Legal System Abuse

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By Lewis Nibbelin, Research Writer, Triple-I

At least 10 percent of property/casualty insurance claims may be fraudulent, adding up to billions of dollars in fraudulent insurance claims every year, the National Insurance Crime Bureau estimates. While legislative reforms are necessary to combat fraud and legal system abuse, many insurers are turning to artificial intelligence and machine learning models to help mitigate the risks in the near term.

Often trained on years of data, AI-powered tools can flag suspicious claims or those likely to litigate based on early risk indicators, such as attorneys or firms frequently linked to inflated claims. Some systems leverage litigation propensity scoring to predict a claim’s likelihood to escalate from the first notice of loss, providing real-time risk ratings throughout the claim cycle that better enable adjustors to prioritize high-risk claims.

By synthesizing historical data and automating the review process, such systems can give insurers the chance to intervene or settle before claims escalate. Research indicates these early-warning models can identify potentially fraudulent claims within two weeks after submission, far outpacing traditional detection methods that involve manually sifting through large, complex volumes of data.

Delivering measurable outcomes

Early intervention can facilitate fairer settlement outcomes and protect insurers and policyholders from unnecessary legal costs that keep upward pressure on premium rates for all consumers. Deloitte analysis suggests applying AI across the claims cycle could save insurers between $80 billion and $160 billion by 2032 through fraudulent claim reduction, translating to billions in savings for their insureds.

Data libraries that pool litigation pattern and claims data from insurers and companies from other industries can also improve AI model insights. Rather than leaving organizations to rely exclusively on their own internal data, these cross-industry approaches can expand base datasets and prediction accuracy, allowing insurers to keep pace with emerging risks.

To grasp insurance executive readiness for AI adoption, Deloitte conducted a separate 2025 survey that found those who reported successful AI initiatives cited “close collaboration across business, tech, data, and talent functions” as the greatest contributing factor. Among all respondents, 35 percent ranked fraud detection as one of their top five areas for implementing generative AI.

It’s no wonder why: As tools to mitigate insurance fraud have evolved, so too have the tools available to bad actors aiming to defraud the claims process. Plaintiffs’ attorneys themselves are seizing on the opportunity, with research from Suite 200 Solutions indicating “almost all litigation financing funds now use AI to identify cases likely to win,” down to “case type, venue, judge, plaintiff attorney, and other factors.”

Tactics to mislead consumers into escalating claims are also increasingly AI-driven, including automated “robocalls” and text messages that solicit receivers to file lawsuits. Another study from the National Insurance Crime Bureau and 4WARN observed that third-party litigation funders (TPLF) are using AI-generated content to scale volume and prolong settlements, as part of a larger digital marketing campaign that attracts 27.8 million clicks to TPLF-hosted websites every month.

Traditional claims review methods fail to capture these modern digital risks, necessitating AI-powered detection and mitigation to stay ahead of new threats.

Industry collaboration is key

Yet, as companies scale their AI investments, human oversight must remain at the forefront, as should maintaining a traceable actuarial record behind every model. Beyond safeguarding model accuracy, AI data understanding and preparation are crucial to ensuring carriers comply with insurance regulations and can uphold consumer trust. Attracting talent that balances actuarial knowledge with AI expertise will be pivotal to successful model deployment.

To address these challenges, Triple-I and The Institutes RiskStream Collaborative – like Triple-I, an affiliate of The Institutes – recently established two coordinating councils to develop shared AI capabilities and research and governance standards across the insurance sector.

Led by RiskStream, the AI Solutions Council brings together insurers, tech firms, and other stakeholders to prioritize multiparty AI use cases and generate AI solutions across the insurance value chain. Alongside Triple-I’s AI Policy Council, which focuses on regulatory and governance frameworks for AI use in insurance, these bodies give insurers a structured way to collaborate on AI solutions and best practices rather than leaving each carrier to build capabilities in isolation.

Learn More:

Cyber Claim Severity Surges as AI, Litigation Accelerate Risk

Legal System Abuse Awareness Campaign Spreads Across U.S.

Legal System Abuse, Artificial Intelligence Cloud 2026 Outlook

Tech — Especially A.I. — Is Top of Mind for Global Insurance Executives

JIF 2025: Litigation Trends, Artificial Intelligence Take Center Stage

How Insurers Address Talent Gap Through Innovation & Technology

Disaster Preparedness, Disaster Resilience, Homeowners Insurance, Roof Condition

Partnering for Resilience: Protecting Homes Through Stronger Roofs

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By Loretta L. Worters, Vice President, Media Relations, Triple-I

Roof damage is a leading driver of insured losses and recovery costs. When a roof fails, the damage rarely stops there. Water intrusion can destroy interiors, equipment, inventory, and critical infrastructure, often leading to business interruptions, displacement, and significant financial hardship.

As hurricanes, hailstorms, tornadoes, wildfires, and other disasters become more frequent and costly, strengthening roofs is one of the most effective ways to reduce damage, improve resilience, and support long-term insurance affordability. For homeowners and businesses alike, a resilient roof is the first line of defense against nature’s most destructive forces.

That is why organizations such as the Insurance Institute for Business & Home Safety (IBHS), the Insurance Information Institute (Triple-I), and the U.S. Small Business Administration (SBA) are increasingly aligned around a simple but powerful principle: investment in resilience works.

These organizations bring complementary strengths. IBHS provides scientific research and testing that underpin resilient roofing practices; Triple-I helps consumers, businesses, policymakers, and the media understand the connection between mitigation, risk reduction, and insurance affordability; and SBA supports small-business preparedness, resilience, and recovery through financing, technical assistance, and disaster assistance programs. Working together, they help translate research into action and encourage broader adoption of proven roof mitigation strategies.

Small improvements make a difference

IBHS research has consistently shown that relatively modest roof upgrades can dramatically reduce storm damage and insurance losses. Improvements like stronger roof deck attachments, sealed roof decks, impact-resistant roofing materials, enhanced edge protection, and improved water barriers help buildings better withstand severe weather. These upgrades are often most cost-effective when incorporated into roof replacement.

One of the most successful resilience initiatives is IBHS’s FORTIFIED™ program, a voluntary construction and re-roofing standard designed to strengthen buildings against severe weather. By enhancing roof performance and reducing the risk of water intrusion, FORTIFIED™ standards help close the gap between minimum building-code requirements and true resilience. As evidence of their effectiveness grows, more insurers and communities are embracing these standards to reduce losses and speed recovery after disasters.

Triple-I helps consumers and policymakers understand that insurance affordability is increasingly linked to reducing preventable losses before disasters occur, while highlighting the economic benefits of resilience investments. Through Triple-I’s educational outreach and resources, property owners can make more informed decisions about protecting their homes and businesses.

Small businesses at risk

Small businesses are especially vulnerable to roof-related losses. A severe storm can interrupt operations for weeks or months, damaging inventory, equipment, technology systems, and customer relationships. This is where SBA can play a transformative role. Financing options, resilience-focused partnerships, technical assistance, and mitigation programs can help overcome one of the biggest barriers to adoption: Upfront cost. Investing in stronger roofs is not simply a construction decision—it is an economic resilience strategy that helps businesses remain operational, communities recover faster, and local economies remain stronger after disasters.

Reducing disaster losses requires collaboration across the public and private sectors. Stronger roofs are more than a construction upgrade—they are an investment in economic stability, community resilience, and a more sustainable insurance market. By aligning scientific research, insurance incentives, public education, and financing support, organizations such as IBHS, Triple-I, and SBA can help drive meaningful change. The question is no longer whether mitigation works. The evidence is clear. The next step is creating the awareness, incentives, and financing needed to make resilient construction the norm rather than the exception.

Property owners seeking practical guidance can access Triple-I’s Roof Toolkit, IBHS’s Roofing Roadmaps, and SBA disaster loans, which can be increased by up to 20% to fund mitigation improvements, such as roof upgrades. Borrowers have up to two years from the date of loan approval to request mitigation funding. Together, these resources provide actionable information and financial support to help strengthen roofs and reduce disaster-related losses.

Learn More:

National Roofing Week Infographic: https://www.iii.org/article/infographic-national-roofing-week

Roofing Toolkit: How Your Roof Influences Your Home and Business Insurance

Insurance Industry

Steady Workers Comp Performance Masks Uneven Industry Realities

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By William Nibbelin, Head of Industry Data and Actuarial Science, Triple-I 

While the workers’ compensation line continues to demonstrate remarkable resilience, underlying metrics indicate carriers must move beyond national averages to maintain long-term underwriting stability, according to the NCCI Annual Insights Symposium (AIS) 2026 – a key event for the workers’ comp industry.

“There’s not a single number that defines the workers’ compensation system,” said Donna Glenn, NCCI chief actuary, in her remarks on the NCCI State of the Line report. “Behind this year’s 91 combined ratio, factors such as industry mix, state differences, and carrier variation are all shaping results.”

Glenn added that insurers must interrogate the data and question these outcomes “to deliver deeper, actionable insights.”

State Differences

The workers’ comp system operates as a collection of unique jurisdictions with independent statutory frameworks and distinct economic exposures, creating variations in performance across states. NCCI acts as the licensed rating, advisory, and statistical organization for workers’ comp in most states, with California and New York being notable exceptions. Together, NCCI-rated states, alongside California and New York, make up 80 percent of the workers’ comp marketplace.

California results heavily skewed national reporting, with the state’s private-carrier accident-year combined ratio totaling 129 in 2025. Claims in the state can remain open after five years, at three times the national average, which has fueled a sharp escalation in cumulative trauma (CT) claims. Such claims now represent over 25 percent of all indemnity claims in the state, compared to a stable average of less than 5 percent across NCCI jurisdictions.

Litigation is another key driver, as more than 90 percent of CT claims in California become litigated. The transition to virtual case hearings has also allowed specialized legal firms to expand their reach statewide. Consequently, the California bureau filed a substantial 10.4 percent rate increase for late 2026.

In contrast, New York approved a loss cost decrease of 21.9 percent, effective late 2026, marking 10 consecutive years of downward rate adjustments. Workers’ comp writers in New York file for rate changes differently than those in California. In New York, they are required to use the New York Compensation Insurance Rating Board loss costs and, therefore, are only able to file loss-cost multipliers when filing for a rate change. In California, they can file loss costs in addition to their loss-cost multipliers.

New York also enforces strict medical treatment guidelines, generic drug formularies, and capped medical fee schedules that require extensive regulatory processes to alter.

On the exposure side, New York has experienced a noticeable post-pandemic structural shift in its economy. While overall total private sector jobs rose to 8.5 million, higher-risk sectors like construction and retail shrank by 7 percent and 9 percent, respectively, since 2019.

Regulatory Impacts

Looking at other states,Nevada was used as an example of how standalone statutory mechanisms impact actuarial trends. The state filed a standalone 21.6 percent loss cost increase for early 2026, an extreme outlier within NCCI states, driven by new state regulations. Senate Bill 317 effective October 1, 2026, will raise Nevada’s long-standing statutory cap limit on exposure reporting of $36,000 of an employee’s payroll to approximately $100,000.

Local medical and administrative delivery systems also impact state performances. NCCI actuaries evaluated temporary disability duration across claims closed within two years and observed substantial state-by-state disparities:

  • Low Duration States (e.g., Oregon, Vermont): 6–7 weeks on average.
  • High Duration States (e.g., the Carolinas, Georgia): 15 weeks on average.

Local care protocols, administrative efficiency, and attorney involvement amplify these disparities, with durations of litigated claims averaging six months longer than non-litigated counterparts.

“The time to close a workers’ compensation claim shows wide variation across jurisdictions: an additional 9 to 25 weeks after all medical services have been delivered”, said Raji Chadarevian, NCCI executive director for actuarial research. “That can have a meaningful impact on the cost of the claim.”

Industry-Specific Trends

At an industry level, claim trends diverge significantly from national averages:

  • Construction remains the largest industry sector by premium volume at 27 percent and achieved the largest drop in claim frequency at approximately 7 points between 2023 and 2024. Frequency decreased across each of its 10 largest job classifications, though medical severity remained the highest of any industry sector, driven by severe fall-from-height hazards. Notably, medical claim severity rose by a substantial 13 points between 2023 and 2024, with over half of the top ten construction classes reporting double-digit severity increases.
  • Health Care is, on average, a higher-frequency industry. Breaking from historical declines, claim frequency increased slightly in 2024, driven by significant multi-year employment growth that introduced a high volume of inexperienced, short-tenured workers. This was the sole sector that meaningfully contributed to job growth in 2025.
  • Office & Clerical roles are a historically low-frequency, low-exposure sector. Following a significant drop in frequency in 2020 due to widespread pandemic-related remote work, and a subsequent rebound in 2021, frequency decline has continued to outpace most other sectors. However, the sector recorded a slight increase in frequency in late 2024, primarily from a spike in motor vehicle accident claims for clerical workers whose professions involve driving.

Learn More:

Core Drivers and Emerging Risks for Workers’ Comp

Triple-I State of the Line Issues Brief: Workers’ Comp (members only)

Facts + Statistics: Workplace Safety/Workers’ Comp

Spotlight On: Workers’ Compensation

Insurance Industry

Core Drivers and Emerging Risks for Workers’ Comp

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By William Nibbelin, Head of Industry Data and Actuarial Science, Triple-I 

Factors driving stability in the workers’ compensation line were a central focus at the NCCI Annual Insights Symposium (AIS) 2026 – a key event for the workers’ comp industry. In aggregate, workers’ comp welcomed its 11th consecutive year of net underwriting profitability in 2025, continuing to outpace the broader property/casualty industry.

Alongside this success, industry leaders and actuaries provided insights into the underlying trends and emerging risks to watch going forward for the line.

Key Findings

  • Premium: Workers’ comp net written premium decreased by 1.5 points in 2025, to $45.6 billion. For private carriers, this decrease was 0.2 points, to $41.6 billion.
  • Changes in premium include a 6-point decline in 2025 bureau loss costs and payroll growth of 4.8 points, comprising 0.5 points in employment and 4.3 points in wage rate.
    • Despite an overall decrease in premium, the residual market share declined to just 5 percent in 2025.
  • Profitability: The 2025 calendar year net combined ratio of 92.8 was an increase of 4.0 points over 2024 at 88.8. For private carriers, the net combined ratio of 91 was an increase of nearly 5 points over 2024 at 86, marking 12 consecutive years of underwriting gains. The accident year combined ratio of 102 is projected to develop downward by 5 to 6 points based on historical reserve experience.
  • Reserves: NCCI estimates a net redundant industry reserve position of $14 billion for private carriers.
  • Severity Trends: Both medical and indemnity severity increased by 4 points in 2025.
  • Frequency Trends: Lost-time claim frequency decreased by 2 points in 2025, compared to a decrease of 5.9 points in 2024. This represents a more moderate decrease in frequency compared to the long-term average annual decline of 3.8 points.

Economic Uncertainty

NCCI filed a 5 percent decrease in loss costs effective in 2026, marking the 13th consecutive year of declines. These results are a product of rising payroll and long-term frequency improvements, coupled with favorable reserve development expectations, which together have outpaced severity increases.

However, underwriting margins face clear headwinds from economic uncertainty, including the significant rise in energy prices and the potential for stagflation. In a stagnant economy, businesses stop growing, unemployment rises, and prices increase.

Yet, as NCCI Practice Leader and Senior Economist Stephen Cooper noted, the economy has remained resilient in 2026, despite these risks.

“Employment growth on a month-to-month basis has been volatile over the past year, with most growth concentrated in one sector,” Cooper explained. “Overall, however, the labor market remains in balance, as both supply and demand have evened out and there have been early signs of the labor market potentially strengthening in 2026.”

Evolving Risks

The symposium highlighted several structural and technological changes altering the nature of workers’ comp risk:

Pain Management: Pain management protocols have increasingly shifted toward holistic treatment methods, including extended physical therapy and topical solutions. Major surgery utilization has dropped by 8 points since 2016, whereas physical therapy utilization has expanded considerably, driven by a greater intensity of procedures per session, rather than an increase in session frequency.

Delivery of Care: Medical benefits are heavily impacted by the broader U.S. healthcare delivery system. Over the past decade, private equity firms have invested more than $1 trillion into independent ambulatory surgery centers, specialty practices, and outpatient clinics. Simultaneously, massive hospital networks are consolidating or restricting health care access in rural communities. These changes contributed to a 5-point drop in the share of workers visiting emergency departments on the day of their injury.

Remote Work: Work-from-home options are increasingly used as “reasonable accommodations” for injured employees in some industry sectors. By eliminating commuting constraints, remote work structures allow injured employees to perform tasks virtually, mitigating lost-time indemnity claims.

AI: Beyond general system performance optimization, AI tools are being deployed for early-stage claim triage, automated medical bill auditing, and identification of potential litigation vulnerability. NCCI has also instituted formal governance structures for digital assets and initiated programs that leverage machine learning models to streamline the risk classification code assignment process.

Aging Workforce: Employees aged 55 and older now account for nearly one-quarter of the total labor force, a segment that will expand over the next decade. While the experience of older workers minimizes injury frequency, their physiological responses are more complex, yielding higher average medical costs and prolonged recovery periods.

“Demographic forces help to shape the workers’ compensation claim environment,” said Paul Hendrick, NCCI Practice Leader and Senior Actuary. “Factors such as employee tenure or the aging workforce are not abstract economic concepts; they have a real, tangible impact on the nature and frequency of claims that occur every day in the workers’ comp system.”

Learn More:

Steady Workers Comp Performance Masks Uneven Industry Realities

Triple-I State of the Line Issues Brief: Workers’ Comp (members only)

Facts + Statistics: Workplace Safety/Workers’ Comp

Spotlight On: Workers’ Compensation

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