Category Archives: Insurers and the Economy

Industry Financials, Insurers and the Economy

Why Financial Markets and Fed See Post-Pandemic Recovery Differently

Leave a comment

Two narratives about how recovery from the COVID-19-driven economic downturn will play out are competing in the business press – the Federal Reserve’s and that of the financial markets.

Market economists typically forecast wider changes in quarter-over-quarter gross domestic product (GDP) than their counterparts at the Fed. But the current discrepancy is wider than it has been in decades. This is creating so much confusion in financial news that a recent edition of Squawk Box discussed the extent to which “markets seem reluctant to believe the Fed’s policy goals.”

The markets see recent GDP growth as closely aligned to stock market performance: a dramatic drop in the second quarter of 2020 and an equally dramatic recovery from third-quarter 2020 to third-quarter 2021.

The Fed sees GDP as driven by structural economic considerations that move only gradually from quarter to quarter. As a result, the Fed estimated a smaller drop in GDP for second-quarter 2020 and a slower recovery ever since.

Over the last year, the Fed view was proven right multiple times.

“Triple-I’s forecasts fall within the consensus central banks view, as represented by the Fed for the U.S. and the International Monetary Fund (IMF) for the large insurance markets we follow,” said Dr. Michel Léonard, Triple-I vice president and senior economist.  He said the expectations gap comes down to three economic considerations:

  • Fiscal stimulus and GDP growth: Fed and market economists disagree about the extent of the relationship between fiscal stimulus and growth. When generating GDP forecasts, all economists assign a “multiplier” to quantify the impact of government spending on GDP growth. Market economists tend to assign larger multipliers than central bank economists. Given the historically high fiscal stimulus of the last 12 months, market economists expect historically high GDP growth. 
  • Shifts in economic output: They also tend to weight quarterly data differently. Fed economists focus more heavily on quarter-to-quarter trends, and market economists on changes within quarters. The COVID-19 economy upended how certain activities are carried out and reduced the comprehensiveness of quarterly data. For market economists, this led to overestimating the decrease in activity in the second quarter of  2020 and now overestimating the increase in first and second quarter 2021.
  • Timing: The Fed and markets agree broadly about GDP growth but disagree on timing. Both expect a comparable amount of growth between now and 2023 but, for the reasons above, allocate it differently across 2021, 2022, and 2023. Market economists allocate most of the growth to 2021, while Fed economists spread it over the 2021-2023 period. This has led to the Fed forecasting higher growth in 2022 than some markets economists.

Auto Insurance, Insurers and the Economy

Here’s what’s happening to your auto insurance costs

Leave a comment

By James Lynch, Chief Actuary, Senior Vice President of Research and Education, Triple-I

You’ve probably been reading news stories about rising inflation, and auto insurance has been pulled into the picture. But that is a little misleading.

Auto insurance rates aren’t soaring. They are returning to normal, pre-pandemic levels.

Consumer prices in April were 4.2 percent higher than a year ago, the Bureau of Labor Statistics reported Wednesday, and its report picked out auto insurance as one of the areas that had “a large impact on the overall increase.”

Auto insurance rates were 2.5 percent higher in April than in March and 6.1 percent higher than a year ago.

That doesn’t mean, though, that the cost of auto insurance is skyrocketing. Remember that a year ago – April 2020 – insurers were busy returning billions of dollars to consumers because of the drastic change in driving patterns the pandemic brought on.

Those givebacks – which eventually totaled $14 billion – drove down the price of insurance, and the official inflation numbers reflected that.

Now driving patterns are returning to pre-pandemic norms – more or less. People are driving somewhat less than before, but they are driving faster and are much more likely to tinker with their smartphones or practice other distracting behaviors.

Premiums are reflecting the new normal, and in terms of the cost of insurance, that looks a lot like the old normal. The price of insurance, using BLS indices, is virtually unchanged from pre-pandemic levels – 0.01 percent higher than it was in March 2020, when the pandemic/recession began.

Catastrophes, Disaster Preparedness, Disaster Resilience, Emerging Risks, Insurers and the Economy, Risk Management

Climate Risk Is Not a New Priority for Insurers

Leave a comment

Treasury Secretary Janet Yellen’s pledge to tackle climate change and warning about the economic consequences of failure to act underscore the fact that climate is no longer “merely” an ecological and humanitarian issue – real money is involved.

As long as climate was perceived as a pet project of academics and celebrity activists, driving behavioral change – particularly on the part of industries with billions invested in carbon-intensive technologies and processes – was going to be an uphill effort. But the Titanic has begun to turn, and no industry is better positioned than insurance to help right its course. Insurers are no strangers to climate-related risk – they’ve had a financial stake in it for decades.

Let’s look at the facts:

Global insured weather-related property losses have outpaced inflation by about 7 percent since 1950. Of the $1.7 trillion of global insured property loss reported since 1990, a third is from tropical cyclones, according to Aon data. Nine of the 10 costliest hurricanes in U.S. history have occurred since 2004, and 2017, 2018, and 2019 represent the largest back-to-back-to-back insured property loss years in U.S. history.

Determining how much such losses are driven by climate versus other factors is complicated, and that’s part of the point.

“I know some have argued that this is a reason for us to move slowly,” Yellen said. “The thinking goes that because we know so little about climate risk, let’s be tentative in our actions—or even do nothing at all.  This is completely wrong in my view.  This is a major problem and it needs to be tackled now.”

Understanding the complexities of weather, climate, demographics, and other factors that contribute to loss trends requires data, analytical tools, and sophisticated modeling capabilities. Insurers invest heavily in these and other resources to be able to assess and price risk accurately. As a result, they’re uniquely well positioned to inform the conversation, drive action, and present solutions. 

And they’re leading by example.

Chubb Chairman and CEO Evan G. Greenberg is among the industry leaders who has been on the forefront of communicating about climate risk. When Chubb announced that it will not make new debt or equity investments in companies that generate more than 30 percent of revenues from coal mining or coal energy production, Greenberg said, “Making the transition to a low-carbon economy involves planning and action by policymakers, investors, businesses and citizens alike. The policy we are implementing today reflects Chubb’s commitment to do our part as a steward of the Earth.”

Swiss Re last month announced a similarly ambitious carbon reduction target of 35 percent by 2025 for its investment portfolio. Zurich Insurance Group last year announced the launch of its Climate Change Resilience Services to help businesses better prepare for current and future risks associated with climate. Aon annually publishes its Weather, Climate and Catastrophe Insight reports.

These are just a few examples of how the insurance industry already is recognizing its stake in addressing climate change and providing resources to help others attack the problem.  

Insurers and the Economy

Insurance Is a Key Part of Financial Literacy

Leave a comment

Many people think of financial literacy primarily in terms of saving and investing – which is understandable, since watching your wealth grow is the most rewarding aspect.

While fiscal discipline and the magic of compound interest are foundational, it’s important not to overlook wealth protection. Insurance plays a critical – and widely misunderstood – role in ensuring that your wealth-building efforts won’t be overtaken by a costly event or accident.

April is Financial Literacy Month, during which organizations across the United States conduct events and carry out initiatives to improve financial literacy – especially among the nation’s youth. While such awareness-building initiatives are important, financial literacy is a year-round, long-term concern — and the COVID-19 pandemic appears to have added urgency.

Two dozen states are now considering legislation on financial literacy. Proponents say student debt and heightened interest in economic inequality are behind the efforts. As of early 2020, high school students in 21 states were required to take a personal finance course to graduate, according to the Council for Economic Education.  That was a net gain of four states since the council’s previous count two years earlier.

“I do think the pandemic is bringing more attention to the topic,” said Billy J. Hensley, president and chief executive of the National Endowment for Financial Education. He noted that after the financial crisis more than a decade ago there was also a flurry of financial literacy proposals in state legislatures.

Nearly half of respondents to a survey from financial planning firm D.A. Davidson said having more financial literacy education would have helped them manage their money better through the pandemic. The study, which surveyed 1,047 U.S. adults, found that 21 percent felt insurance was the subject they understood least – second only to investments. 

Triple-I provides information and insights individuals and businesses need to make educated decisions, manage risk, and appreciate the essential value of insurance. Our website, blog, and social media channels offer a wealth of data-driven studies, videos, articles, infographics and other resources dedicated to explaining insurance. 

Homeowners Insurance, Insurers and the Economy

How affordable is homeowners insurance?

Leave a comment

The average homeowners insurance premium was $1,249 in 2018, up by 3.1 percent from the previous year, according to the latest data from the National Association of Insurance Commissioners (NAIC).  In 2017 the average premium was up 1.6 percent.

To put this in context, the consumer price index, a measure of the price of goods and services in the United States, rose by 1.9 percent in 2018 and by 2.1 percent in 2017.

The average renters insurance premium fell 0.6 percent in 2018, marking the fourth consecutive annual decline. 

It’s important to note that the average homeowners or renters premium is an imperfect measure of the relative “price” of insurance, according to the NAIC. That’s because the ultimate cost of your policy will depend on a wide variety of factors such as the differences in hazards, economic conditions, and real estate values from state to state.

Insurers determine homeowners insurance premiums based on the amount of coverage purchased (generally based on the value of the insured property), the type of property covered, the types of perils covered, and the specific limits and deductibles a policyholder chooses.

Click here for a state-by-state graphic of average homeowners insurance premiums.

The financial burden of homeownership insurance
Americans generally don’t view the cost of homeowners insurance as a financial burden. Triple-I’s 2017 Consumer Insurance Survey found that only 31 percent of Americans consider homeowners insurance to be a financial burden. This is the lowest level in more than a decade and represents a significant drop from the 49 percent of people in 2009 who said the cost of homeowners insurance was a financial burden.

One reason homeowners insurance has not been considered a financial burden is that Americans’ income growth has consistently outpaced home insurance costs; however this trend may be temporarily interrupted by the pandemic-related recession of 2020. According to an analysis by Risk Information‘s Property Insurance Report (PIR), the trend was already apparent in 2018.

The PIR report suggests that the trend toward more affordable insurance appears to have continued in 2019, but acknowledges that in 2022, when the NAIC releases average homeowners premiums for 2019, the HURT Index may fall lower than 1.4 percent for the first time since 2010.

Customer service

“Homeowners insurance customers are the single-most-valuable group of personal lines customers for P&C insurers,” said Robert M. Lajdziak, senior consultant of insurance intelligence at J.D. Power.

“They have a significantly higher bundling rate, 38 percent higher product penetration beyond home and auto, and their tenure is twice the length of a monoline auto customer. The potential ‘lifetime customer value’ of homeowners makes meeting their needs and motivations to renew a critical task for the industry.”

Large, established insurers and insurtech startups are expected to compete for customers’ premium dollars by delivering great service and converting renters insurance clients into homeowners insurance clients, according to J.D. Powers.

Millennial customers in particular are more likely to select their homeowners insurer based on good service experience and are much more likely than Boomers to use insurer-provided tools to inventory their possessions, thereby increasing the level of engagement with their insurer and creating additional opportunities to develop loyalty through good customer service.

Echoing J.D. Powers’ findings, a Deloitte survey found that respondents aged 18 to 34 with $50k to $100k+ annual income who have purchased a house in the past three years, referred to as the “gadget group,” are more likely to purchase a ‘connected and preventative’ home insurance service than any other type of policy.

Homeowners have also expressed a strong demand for parametric type home insurance products, according to Deloitte. This type of insurance pays claims of a pre-agreed amount automatically when an event falls within set parameters, such as a level of rainfall or speed of wind.

Business Insurance, Business Risk, Insurers and the Economy, Risk Management

Maritime Supply-Chain Vulnerabilities: Why This Won’t Be the Last Timea Megaship Gets Stuck

Leave a comment

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

(Photo by Mahmoud Khaled/Getty Images)

When mega containership Ever Given wedged herself across a one-way section of the Suez Canal during a sandstorm last month, it brought 10 percent of global trade to a halt for a week. The ship – owned by Taiwanese container transportation and shipping company Evergreen Marine Corp. – was finally refloated and traffic in the canal was able to resume.

A Risk & Insurance cover story, published by Triple-I sister organization Risk & Insurance Group (RIG), describes how – in the context of a trend toward larger container vessels and a global supply chain already disrupted by COVID-19 – this incident should serve as a wake-up call for insurers.

Looking at the Ever Given grounding and disruption of canal traffic from a marine insurance perspective, RIG author Gregory DL Morris highlights the impact on cargo insurance claims and the potential for cargo spoilage. He also discusses compromised maneuverability of these massive vessels in high winds and references an increasing number of on-board fires, challenges surrounding salvage, and lack of suitable repair facilities, noting, “Underwriters need to be aware of this.”

Despite the likelihood that immediate property loss in this case will be minimal, megaships pose serious challenges to marine insurance and risk management. According to MDS Transmodal, a transport and logistics research firm, average vessels capacity grew 25 percent between 2014 and 2018, with ultra-large containerships accounting for 31 percent of the total capacity deployed in the second quarter of 2018. Transmodal attributes this trend to industry consolidation through mergers and acquisitions, as well as growing trade lane co-operation through alliances, slot sharing, and vessel-sharing agreements.

Even as traffic through the canal resumes, terminals will experience congestion. In addition, the severe drop in vessel arrival and container discharge in major terminals will aggravate existing shortages of empty containers available for exports. Delays in shipments, increased costs, and product shortages are therefore likely. 

“The fact is that an already heavily disrupted maritime supply chain has taken another hit that will further affect its fluidity, with long-term consequences related to congestions, lead times and predictability,” said Jens Roemer, chair of the Sea Transport Working Group of the International Federation of Freight Forwarders.

While traffic through the canal is now moving, the global supply chain’s vulnerabilities may only now be beginning to become clear.

“Whether a blizzard in Texas or a sandstorm in Egypt,” Morris writes, “the narrow focus on minimal inventories that rely upon just-in-time delivery leaves little allowance for weather or accident.”

Business Risk, Emerging Risks, Health & Safety, Insurers and the Economy, Risk Management

“Lightning Round” Highlights Technologies Reopening the Economy

Leave a comment

Public discussion about re-opening the economy after COVID-19 has mostly revolved around the safety, efficacy, and availability of various vaccines. But in the longer term, other measures and new technologies will be key to getting back to normal and being prepared for future public health emergencies.

Last week’s Lightning Round V: Reopening America in the Post-Pandemic Scenario – a collaboration between Triple-I’s Resilience Accelerator, ResilientH20 Partners, and The Cannon – featured three technologies that promise to help facilitate the recovery.

Workplace workflow

Tomer Mann, executive vice president of business development for 22 Miles, discussed his company’s “digital experience platform,” which incorporates temperature-scanning technology, touchless kiosks, virtual concierge, and other applications to provide social distance among customers and employees and early warning of possible infection in business settings.   

“In March, when we were seeing a lot of the temperature-scanning solutions coming out of China, we realized we could leverage our software to pivot and create a more secure solution, avoiding some of the sensors that are coming out of China that are blacklisted in the trade market and avoiding some of the data breach implications,” Mann said.

22 Miles’ “workplace workflow” starts at a building’s lobby, using facemask and temperature detection and including badge integration and access control for employees and guests. For companies using shared workspaces, the system tracks what spaces are being used to facilitate sanitization between uses. To minimize physical contact while maximizing interactivity, the system’s components can be activated using voice, gesture, or mobile device.

In addition to facilitating safe, hygienic use of these spaces, the system captures large amounts of data that can provide warnings of possible infections and inform modifications to the workflow.

Scrubbing the air

Santiago Mendoza, senior vice president with Integrated Viral Protection, spoke about his company’s indoor air protection system, which has been shown to capture and destroy coronavirus at a 99-plus percentage rate. The system has shown similar results when tested with anthrax spores and other airborne pathogens.

Heating, ventilation, and air conditioning (HVAC) systems are “super spreaders” of coronavirus and other pathogens, Mendoza said, adding that most filter systems only catch and don’t kill them. 

“Our system heats up to almost 400 degrees Fahrenheit and destroys the pathogens,” he said.

The IVP system is available for commercial and residential uses and has been installed in hospitality venues, health facilities, and schools across the United States, Mendoza said. It comes in multiple sizes, including a personal unit for travelers to use in hotel rooms and other closed spaces.

Early warning in water

Jennings Heussner, business development manager for BioBot Analytics, a wastewater epidemiology company, explained how BioBot went from testing for opioids to tracking coronavirus.

“We analyze wastewater coming into treatment plants for human health markers,” Heussner said. The company originally was focused on the opioid epidemic, helping communities better understand the nature of their local opioid problems to better inform their public health response.

When the pandemic hit, BioBot expanded its focus and became the first company in the United States to identify the presence of the virus in wastewater.

Leveraging existing wastewater sampling processes, BioBot analyzes the sample and reports back within one business day after receiving it, providing a quick, inexpensive, comprehensive early warning system.

Ready and resilient

Such technologies will be essential parts of building a pandemic-ready and resilient society. Anticipating and addressing outbreaks early can help alleviate health-related and business-interruption concerns and head off insurance claims.

Just as the insurance industry played a vital role in improving vehicle safety, infrastructure, building codes, and more, insurers and risk managers – partnering with policymakers, businesses, homeowners, and others – will help determine which of these emerging solutions will endure.

Industry Financials, Insurance Industry, Insurers and the Economy

Triple-I/Milliman Groundhog Day Report Projects Insurer Growth, Profits In 2021

Leave a comment

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

A pandemic, civil unrest, and weather-related catastrophes impacted the U.S. property/casualty (P/C) insurance industry in 2020, but not to the extent that was originally feared.

Few predict a repeat of the events of 2020, yet new projections from the Insurance Information Institute (Triple-I) and Milliman envision strong premium growth for 2021 with an underwriting result comparable to last year.

Despite myriad challenges, U.S. auto, homeowners, and commercial insurers are projected to realize a modest 1.9 percent growth in net premiums written and to book a combined ratio of 98.9 through year-end 2020, according to Triple-I and Milliman. This year, net premiums written will increase 6.1 percent, and the combined ratio will improve slightly, to 98.5, the two organizations project. Net premiums written are premiums written after reinsurance transactions. The combined ratio is the percentage of each premium dollar a P/C insurer spends on claims and expenses.

“We think the year ended surprisingly well, given the difficult circumstances the industry found itself in,” said James Lynch, FCAS, senior vice president and chief actuary, Triple-I.  “We project a slight underwriting profit in 2020, fairly similar to 2019. We project similar results over the next two years.”

The year-end 2020 projections, along with those for this year and next, were unveiled during a Triple-I members-only webinar on February 2, “Triple-I/Milliman Underwriting Projections 2021-2022: Groundhog Day Edition,” moderated by Triple-I CEO Sean Kevelighan.

P/C insurance industry premium growth will rebound in 2021, the Triple-I and Milliman projected, as the hard market in commercial lines will augment exposure growth from the economic recovery. Panelists also forecast continued underwriting profits through 2022, with projections for several major lines of business.

“Economists expect growth to improve this year and next, which will fuel growth in exposures in most lines,” said Jason B. Kurtz, FCAS, MAAA, a principal and consulting actuary at Milliman, an independent risk management, benefits, and technology firm.

Kurtz noted, however, that recent signs of slowdown are “concerning – retail sales fell in December, adjusted for the season and new jobless claims remain stubbornly high.  So that may delay growth, as might the spread of so-called variant coronaviruses, which the CDC is expecting will dominate the cases in the spring.”

During the webinar, Dr. Michel Léonard, CBE, vice president and senior economist, Triple-I, took a preliminary look at third-quarter 2020 P/C insurance industry financial results.

The U.S. P/C insurers turned in a profitable performance in 2020’s third quarter, even as the industry’s net income dropped 26 percent for the second quarter in a row, according to Dr. Léonard.  “While it was below the 10-year average, it was overall stronger than expected given the structurally low-rate environment yields and equity market volatility.”

Léonard concluded: “Prudent asset management and sound underwriting practices ensured the continued financial stability of the industry, even as we faced a uniquely challenging year, delivering on our contribution to systemic financial stability and commitment to policyholders.”

To learn about Triple-I membership, visit iiimembership.org

Business Risk, Disaster Resilience, Emerging Risks, Insurers and the Economy, Webinars

Virtual Triple-I Forum Reviews 2020, Looks Ahead at Risks, Opportunities

Leave a comment

Sean Kevelighan, Triple-I CEO

Insurance is a business that promotes and demands resilience, and 2020 was a year-long case study in our industry’s ability to respond rapidly to new challenges from a firm financial foundation. Triple-I’s virtual Joint Industry Forum (JIF) provided many examples from a range of industry and academic leaders, along with insightful discussions about what the industry faces in the near and longer terms.

At the 2020 JIF in New York City, it was clear from our various panels that the industry had a full plate of priorities for the year ahead. Then came COVID-19, and a whole new set of public health and economic concerns was added to the existing exposure mix. The virus brought a strong economy nearly to a halt; while officials assessed and responded to these threats, civil unrest on a scale not seen since the 1990s broke out on the streets of many cities; historic and near-historic weather and wildfire activity descended on communities whose resources were already strained by the pandemic.

And all of the above took place amid the uncertainty created by the most contentious, chaotic election year in modern U.S. history.

Through it all, as this year’s JIF speakers described, the property/casualty insurance industry managed to shine.

“Look at how our companies performed” in the real-time shift to fully remote work, noted Chuck Chamness, President and CEO of the National Association of Mutual Insurance Companies (NAMIC). “Then look at the dynamic changes in our businesses caused in large part by the pandemic, where we gave back $14 billion in premiums to policyholders and contributed a couple of hundred million dollars-plus in charitable contributions. We really did our job this year.”

David Sampson, American Property Casualty Insurance Association (APCIA) President and CEO, added that the “bulk of the industry came together to proactively work with agents and policymakers to create a solution that could work for all stakeholders to provide protection against widespread economic shutdown as a result of a viral outbreak.”

APCIA, NAMIC, and Independent Insurance Agents and Brokers of America proposed to Congress a Business Continuity Protection Plan (BCPP) that would allow businesses to buy revenue-replacement coverage for up to 80 percent of payroll and other expenses in the event of a pandemic through state-regulated insurance entities, with aid coming from the Federal Emergency Management Agency (FEMA), which would run the program.

Our industry also faced a literal existential threat in the form of efforts to require insurers to pay billions in business income (interruption) claims for which not one penny of premium had ever been paid. Thanks to industry leaders stepping up to educate policymakers and the media, much of this threat – though, by no means all of it – seems to have faded. Triple-I’s Future of American Insurance & Reinsurance (FAIR) campaign played a critical role in informing policy discussions on business interruption coverage, the uninsurability of pandemic risk, and the need for federal involvement to mitigate the financial impact of future pandemics.

Throughout this year’s virtual JIF, the emphasis on innovation is a consistent thread. Peter Miller, President and CEO of The Institutes, observed that the pandemic and its attendant operational and economic stresses forced the industry into innovation overdrive. He cited a member of The Institutes’ board saying 2020 “caused them to do 10 years of innovation in one,” adding that board members have told him work-from-home alone has saved their companies “one hundred-plus million dollars a year.”

Whether discussing the industry’s response to climate change and extreme weather or how to communicate the importance of risk-based pricing to policymakers, innovation is at the heart of solving every challenge (and seizing every opportunity) our industry faces. Peter emphasized the importance of using innovation strategically across the entire value chain – not just to solve specific problems as they emerge.

In addition to the panelists I mentioned above, the conversations featured a cross section of industry leaders, Triple-I subject-matter experts and non-resident scholars. If you weren’t able to attend, you can view and watch the panels here.

Insurance Industry, Insurers and the Economy

What property/casualty insurance industrycan expect fromBiden White House

Leave a comment

On January 20, in a historic inauguration ceremony surrounded by U.S. soldiers guarding against domestic terrorism — before a field of 200,000 illuminated flags representing Americans who could not attend the ceremony because of the coronavirus pandemic — President Joe Biden and Vice President Kamala Harris were sworn into office.

Sean Kevelighan, CEO, Insurance Information Institute (Triple-I), today released the following statement:

“Every four years—for more than two centuries—the United States has celebrated its Constitution, and that historic document’s invocation of “We, the People,” through the orderly and peaceful transfer of power atop the government’s executive branch. With today’s inauguration of President Joseph Biden and Vice President Kamala Harris, that solemn tradition continues in our nation’s capital only two weeks after unprecedented lawlessness descended upon Washington, D.C.

The U.S. economy is facing extraordinary challenges due to the COVID-19 pandemic. Yet the U.S.’s insurance industry will continue to provide essential financial protections to individuals and businesses while at the same time employing millions of Americans and paying billions of dollars in taxes to support crucial government services. The industry-supported Insurance Information Institute congratulates the Biden-Harris administration as it takes office. We also stand ready to provide its policymakers with the Triple-I’s unique, data-driven insights on insurance to inform public policy.”

The Biden administration has listed COVID-19, economic recovery, racial equity, and climate change among its top priorities.

In coming months, the property/casualty insurance industry is likely to encounter a frenetic pace of legislative activity on many issues affecting its operations. Here are just a few:

Climate Change –  Senator Dianne Feinstein’s proposed Addressing Climate Financial Risk Act, intended to help federal regulators understand and mitigate risks from climate change within the financial system, would require a Federal Insurance Office (FIO) report on how to modernize and improve climate risk insurance regulation.

“The insurance industry is more directly affected by climate risk than other areas of the financial system,” said Feinstein’s press release. The report would be modeled on FIO’s 2013 report on modernizing state insurance regulation.

Rep. Carolyn Maloney introduced the Pandemic Risk Insurance Act, which is modeled after the Terrorism Risk Insurance Act enacted after 9/11. However, the bill has yet to gain widespread support. The insurance industry has advanced several pandemic risk mitigation proposals of its own.

Congress could deliberate reauthorizing the National Flood Insurance Program, which was last done with the Biggert-Waters Flood Insurance Reform Act of 2012.

Full federal marijuana legalization remains daunting, with a slim Democratic majority, according to Politico, but piecemeal legislation with wider bipartisan support, such as banking access for cannabis businesses and medical marijuana research, may have a better chance to advance. Conflicting state and federal laws have discouraged insurers from participating in the cannabis-related business market.

An expected increase in the corporate tax rate would mean higher tax liabilities for property/casualty insurers.

Risk-based insurance pricing is an issue that’s expected to heat up, and insurers will have to explain to a new set of legislators that the business of insurance hinges on predicting the level of risk a policyholder represents and charging a premium that corresponds with that level of risk.

On January 28, at Triple-I’s virtual Joint Industry Forum, CEOs from five major insurance industry trade associations will share their perspectives and public policy priorities for 2021. Click here to register for the complimentary event.