Category Archives: Risk Management

Insurance Industry, Legal Environment, Risk Management

Triple-I Brief Highlights Legal System Abuse and Attorney Advertising

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The Insurance Information Institute (Triple-I) has released its latest issues brief, Legal System Abuse and Attorney Advertising for Mass Litigation: State of the Risk, which discusses how mass torts, specifically Multidistrict Litigation, and aggressive attorney advertising can in combination fuel the risk of legal system abuse.

Advertising is one of the most common methods companies use to sell their products and services and influence public perceptions. While the issue brief doesn’t argue that general advertising or filing for due process is problematic, it does offer a risk management-based lens for viewing how aggressive attorney advertising campaigns can fuel costs associated with settling claims.

Key Findings

  • Legal service providers spent $2.5 billion on 26.9 million ads across the United States.
  • Research suggests that legal advertising increases the number of plaintiffs in multidistrict litigation (MDL), which are large lawsuits consisting of multiple civil cases involving one or more common questions of fact but pending in different districts.
  • Product liability cases, which accounted for 38 percent of pending MDLs as of August 2023, emerged as the single largest category of MDLs, while other case types have decreased from 2012 to 2022.
  • The third-party litigation funding market, with an estimated size of $16 billion, is a likely resource for advertising budgets for mass torts; however, 12 states and two jurisdictions have enacted or are considering disclosure requirements.

Ads for legal services and lawsuits saturate all channels of communication – public billboards, radio and television broadcasts, and social media – dangling the lure of a financial windfall. Legal services marketing isn’t uniquely used for mass litigation cases. Nonetheless, it is overall geared to recruit as many lawsuit filers as possible. Therefore, aggressive advertising for legal services introduces the risk of fueling higher claim costs via problematic litigation.

These advertisements often employ an exaggerated sense of urgency, urging the target audience to take immediate legal action without considering alternative options for resolution. These ads may also often overpromise results by implying guaranteed windfalls (i.e., “We’ll get you your money’’), creating unrealistic expectations for plaintiffs and, thus, potentially impacting the time to settle. Additionally, when ads mention a particular product or brand, attorneys communicate plaintiff-biased information to potential jurors. In essence, a juror may recall seeing a flood of advertisements about the product and think, “Where there’s smoke, there must be fire.”

The brief focuses on MDLs because these are complex, huge, and slow-paced cases that may sometimes involve hundreds, even thousands of individual lawsuits. Therefore, these cases inherently carry the risk of driving up legal costs. Also, the large number of plaintiffs introduces the risk that questionable claims might slip into the lawsuit. For example, a particular product may have indeed caused harm to some, but not all, of the plaintiffs who used it.

Pummeling the world with ads can be expensive. Enter the third-party litigation funding (TPLF) market, which, despite tighter capital controls in recent years, grew to $16 billion in 2024, up from $15.2 billion in 2023. TPLF offers discretionary funding to the litigation industry, which can, in turn, use the money to fuel more lawsuits seeking large settlements — a boon for the firms and the funder. The brief outlines how several states and jurisdictions are moving to create transparency around TPLF involvement.

Practices that foster unnecessary or drawn-out litigation are among several hard-to-measure forces that can shift loss ratios for insurers and disrupt forecasts, making cost management more challenging. Ultimately, the cost is passed on to consumers, adversely impacting coverage affordability and availability. Triple-I is committed to advancing conversations with business leaders, government regulators, consumers, and other stakeholders to attack the risk crisis and chart a path forward.

Read the issue brief to find out more about how attorney advertising can contribute to legal system abuse. To join the discussion, register for JIF 2025. Follow our blog to learn more about trends in insurance affordability and availability across the property/casualty market.

Catastrophes, Disaster Preparedness, Disaster Resilience, Regulation, Risk Management, Wildfire

L.A. Homeowners’ Suits Misread California’s Insurance Troubles

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By Lewis Nibbelin, Contributing Writer, Triple-I

Two lawsuits filed in Los Angeles claim major California insurers colluded illegally to impede coverage in wildfire-prone areas, forcing homeowners into the state’s last-resort FAIR Plan.  Accusing carriers of violating antitrust and unfair competition laws, the two suits exemplify an ongoing disconnect between public and insurer perceptions of insurance market dynamics, exacerbated by legislators’ resistance to accommodating the state’s evolving risk profile.

An untenable situation

Both suits claim the insurers conspired to “suddenly and simultaneously” drop existing policies and cease writing new ones in high-risk communities, deliberately pushing consumers into the FAIR Plan. Left underinsured by the FAIR Plan, the plaintiffs argue they were wrongfully denied “coverage that they were ready, willing, and able to purchase to ensure that they could recover after a disaster,” Michael J. Bidart, who represents homeowners in one of the cases, said in a statement.

Established in response to the 1965 Watts Rebellion, the California FAIR Plan provides an insurance option for homeowners unable to purchase from the traditional market. Though FAIR Plans offer less coverage for a higher premium, they cover properties where insurance protection would otherwise not exist. California law requires licensed property insurers to contribute to the FAIR Plan insurance pool to conduct any business within the state, meaning they share the risks associated with those properties.

Intended as a temporary solution until homeowners can secure policies elsewhere, the FAIR Plan has become overwhelmed in recent years as more insurers pull back from the market. As of December 2024, the FAIR plan’s exposure was $529 billion – a 15 percent increase since September 2024 (the prior fiscal year end) and a 217 percent increase since fiscal year end 2021. In 2025, that exposure will increase further as FAIR begins offering higher commercial coverage for farmers, homebuilders, and other business owners.

With a policyholder count that has more than doubled since 2020, the FAIR Plan faces an estimated $4 billion total loss from the January fires alone.

Out of touch regulations

Homeowners are understandably frustrated with dwindling coverage availability, which currently afflicts many other disaster-prone states. Supply-chain and inflationary pressures, which could intensify under oncoming U.S. tariff policies, help fuel the crisis. But California’s problems stem largely from an antiquated regulatory measure that severely constrains insurers’ ability to manage and price risk effectively.

Despite a global rise in natural catastrophe frequency and severity, regulators have applied the 1988 measure, Proposition 103, in ways that bar insurers from using advanced modeling technologies to price prospectively, requiring them to price based only on historical data. It also blocks insurers from incorporating reinsurance costs into their prices, forcing them to pay for these costs from policyholder surplus and/or reduce their presence in the state.

Insurers must adjust their risk appetite to reflect these constraints, as they cannot profitably underwrite otherwise. Underwriting profitability is essential to maintain policyholder surplus. Regulators require insurers to maintain policyholder surplus at levels that ensure that every policyholder is adequately protected.

Restricting insurers’ use of prospective data, however, inhibits risk-based pricing and weakens policyholder surplus, facilitating policy nonrenewals and, in serious cases, insolvencies.

Insurance Commissioner Ricardo Lara implemented a Sustainable Insurance Strategy to mitigate these trends, including a new measure that authorizes insurers to use catastrophe modeling if they agree to offer coverage in wildfire-prone areas. The strategy has garnered criticism from legislators and consumer groups, one of whom is suing Lara and the California Department of Insurance over a 2024 policy aimed at expediting insurance market recovery after an extreme disaster.

“Insurers are committed to helping Californians recover and rebuild from the devastating Southern California wildfires,” Denni Ritter, the American Property Casualty Insurance Association’s department vice president for state government relations, said in a statement about the suit. “Insurers have already paid tens of billions in claims and contributed more than $500 million to support the FAIR Plan’s solvency – even though they do not collect premiums from FAIR Plan policyholders.”

A call for collective action

Litigation prolongs – it does not alleviate – California’s risk crisis. Government has a crucial role to play in addressing it, from adopting smarter land-use planning regulations to investing in long-term resilience solutions.

For instance, Dixon Trail, a San Diego County subdivision dubbed the country’s first “wildfire resilient neighborhood,” models the Insurance Institute for Business & Home Safety (IBHS) standards for wildfire preparedness, but not at a cost attainable to most communities, and few local governments incentivize them. Launched by state legislature in 2019, the California Wildfire Mitigation Program is on track to retrofit some 2,000 houses along these guidelines, with the goal of solving how to fortify homes more quickly and inexpensively. Funded primarily by FEMA’s Hazard Mitigation Assistance Grant program, the pilot has thus far avoided the same cuts befalling FEMA’s sister programs under the Trump Administration.

Regardless of what legislators do, California homeowners’ insurance premiums will need to rise. The state’s current home and auto rates are below average as a percentage of median household income, reflecting a combination of the increased climate risk and of the regulatory limitations preventing insurers from setting actuarially sound rates. Insurance availability will not improve if these rates persist.

To quote Gabriel Sanchez, spokesperson for the state’s Department of Insurance: “Californians deserve a system that works – one where decisions are made openly, rates reflect real risk, and no one is left without options.” Insurers do not wield absolute control over that system, and neither do legislators, regulators, consumer advocates, or any other singular group. Confronting the root causes of these issues – i.e., the risks – rather than the symptoms is the only path towards systemic change.

Learn More:

Despite Progress, California Insurance Market Faces Headwinds

California Insurance Market at a Critical Juncture

California Finalizes Updated Modeling Rules, Clarifies Applicability Beyond Wildfire

How Proposition 103 Worsens Risk Crisis In California

Tariff Uncertainty May Strain Insurance Markets, Challenge Affordability

Issues Brief: California Struggles to Fix Insurance Challenges (Members only)

Issues Brief: Wildfire: Resilience Collaboration & Investment Needed (Members only)

Business Risk, Careers and Employment, Insurance Industry, Insurers and the Economy, Market Conditions, Risk Management, Specialty Coverage

Hartford’s Karla Scott on the Present & Future of Marine Insurance

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

When Karla Scott first entered the insurance industry, she didn’t set out with a grand plan to become a leader in marine underwriting.

“I fell into it,” she admits. Starting at a brokerage firm focused on logistics insurance, she quickly discovered a passion for global trade and cargo underwriting.

“It’s different every day,” says Scott, who is global logistics product leader and senior managing director, Ocean Marine, The Hartford. She joined the company after The Hartford acquired Navigators in 2019.

“The technical work keeps my skills sharp, while the camaraderie and shared purpose offer personal and professional fulfillment.”

– Karla Scott

Scott works with clients, agents, and brokers around the world to ensure that businesses have the protection they need through the product’s entire supply-chain life cycle. Her team insures raw materials and finished goods that are transported on containerships, planes, trains, and trucks.  From geopolitics to commodity shifts, it’s an ever-evolving, complex industry that demands constant awareness and adaptation.

Now, with 24 years in marine insurance, Scott reflects on a career shaped by resilience, strong mentorship, and a deep commitment to community. Her journey underscores both the opportunities and challenges faced by women in a traditionally male-dominated field.

“Disrupting trade with…China, Canada, or Mexico would affect cost and the availability of insurance coverage.”

– Karla Scott

A Sea Change for Women

“Fifteen years ago, I sat at a table with 35 industry leaders and was the only woman,” Scott says. “But progress is happening. While marine insurance remains a niche within the broader insurance world, more women are entering the field and rising into leadership roles.”

There continues to be a gender pay gap and lack of career advancement opportunities, but Scott says “part of the reason, frankly, is that women tend not to self-advocate. It’s critical in the marine insurance space to promote yourself, but women often feel uncomfortable doing that.  Self-advocacy is not boastfulness. No one is going to put you in the spotlight unless you step into it.  Those are the skills we need to teach women coming up in this business.”

Being a woman on the West Coast in an East Coast-dominated industry meant navigating additional hurdles.

“There’s a current you swim against,” she says.

Overcoming Barriers

Support from forward-thinking male mentors and advisors helped her stay the course.

“I am indebted to three mentors who presented different strengths,” Scott says. “I learned how to manage people, to motivate people, technical skills, how important your reputation is in this industry, and how to push hard and be aggressive in certain situations and not aggressive in other situations.”

She also candidly addresses the internal battles many women face — imposter syndrome.

“I’ve experienced it myself and have reached out to my mentors, who are great at listening to my frustrations,” she says. “Having a strong network can help you work through those issues. Now that I’m on the other side, I’m pushing my mentees through those obstacles, helping them find their voice and teaching them to self-advocate—skills critical to closing the gender pay gap.”

The Power of Community

Scott’s involvement with the American Institute of Marine Underwriters (AIMU) and the Board of Marine Underwriters in San Francisco has been instrumental in her career. She has served as president of the latter twice and speaks passionately about the importance of collaboration in the insurance industry.

“One of the most unique parts of marine insurance is that we work in partnership with competitors to solve industry problems,” she says. “The technical work keeps my skills sharp, while the camaraderie and shared purpose offer personal and professional fulfillment.”

Trade Tensions and Industry Impacts

As global trade faces increasing scrutiny and tariff battles, Scott is already seeing the effects.

“Clients are canceling freight contracts, and volumes are dropping,” she says. “The result means lower trade volume, higher valuation of goods, and potential inflationary cycles may hit consumers hard.”

She points out that the lack of federal stimulus (unlike during the pandemic) leaves little room for economic cushioning.

“It’s a ‘hold your breath’ kind of moment,” Scott says.

Cargo theft is another growing concern.

“It spikes when inflation rises,” Scott notes, pointing out how easy it has become to resell stolen goods on platforms like Amazon and eBay.

Talk of reshoring manufacturing often overlooks the complexity of global trade.

“You can’t flip a light switch and manufacture everything in the U.S.,” she explains. “Machinery to build those goods often comes from Germany or Japan.

“Disrupting trade with top partners like China, Canada, or Mexico would significantly affect both cost and the availability of insurance coverage,” Scott says. “If consumer confidence drops and trade volumes fall, insurance demand will, too.”

Scott also highlights a deeper economic risk: the potential erosion of the U.S. dollar’s dominance in global trade. “If that shifts, the American economy could face even greater challenges.”

Catastrophes, Coastal Property, Disaster Preparedness, Disaster Resilience, Emerging Risks, Flood Insurance, Homeowners Insurance, Industry Awards & Events, Insurers and the Economy, Lightning, Market Conditions, Risk Management, Technology, Wildfire

ClimateTech Connect Confronts Climate Peril From Washington Stage

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The Institutes’ Pete Miller and Francis Bouchard of Marsh McLennan discuss how AI is transforming property/casualty insurance as the industry attacks the climate crisis.

“Climate” is not a popular word in Washington, D.C., today, so it would take a certain audacity to hold an event whose title prominently includes it in the heart of the U.S. Capitol.

And that’s exactly what ClimateTech Connect did last week.

For two days, expert panels at the Ronald Reagan Building and International Trade Center discussed climate-related risks – from flood, wind, and wildfire to extreme heat and cold – and the role of technology in mitigating and building resilience against them. Given the human and financial costs associated with climate risks, it was appropriate to see the property/casualty insurance industry strongly represented.

Peter Miller, CEO of The Institutes, was on hand to talk about the transformative power of AI for insurers, and Triple-I President and CEO Sean Kevelighan discussed – among other things – the collaborative work his organization and its insurance industry members are doing in partnership with governments, non-profits, and others to promote investment in climate resilience. Triple-I is an affiliate of the Institutes.

Sean Kevelighan of Triple-I and Denise Garth, Majesco’s chief strategy officer, discuss how to ensure equitable coverage against climate events.

You can get an idea of the scope and depth of these panels by looking at the agenda, which included titles like:

  • Building Climate-Resilient Futures: Innovations in Insurance, Finance, and Real Estate;
  • Fire, Flood, and Wind: Harnessing the Power of Advanced Data-Driven Technology for Climate Resilience;
  • The Role of Technology and Innovation to Advance Climate Resilience Across our Cities, States and Communities;
  • Pioneers of Parametric: Navigating Risks with Parametric Insurance Innovations;
  • Climate in the Crosshairs: How Reinsurers and Investors are Redefining Risk; and
  • Safeguarding Tomorrow: The Regulator’s Role in Climate Resilience.

As expected, the panels and “fireside chats” went deep into the role of technology; but the importance of partnership, collaboration, and investment across stakeholder groups was a dominant theme for all participants. Coming as the Trump Administration takes such steps as eliminating FEMA’s Building Resilient Infrastructure and Communities (BRIC) program; slashing budgets of federal entities like the National Oceanographic and Atmospheric Administration (NOAA) and the National Weather Service (NWS); and revoking FEMA funding for communities still recovering from last year’s devastation from Hurricane Helene, these discussions were, to say the least, timely.

Helge Joergensen, co-founder and CEO of 7Analytics, talks about using granular data to assess and address flood risk.

In addition to the panels, the event featured a series of “Shark Tank”-style presentations by Insurtechs that got to pitch their products and services to the audience of approximately 500 attendees. A Triple-I member – Norway-based 7Analytics, a provider of granular flood and landslide data – won the competition.

Earth Day 2025 is a good time to recognize organizations that are working hard and investing in climate-risk mitigation and resilience – and to recommit to these efforts for the coming years. What better place to do so than walking distance from both the White House and the Capitol?

Learn More:

BRIC Funding Loss Underscores Need for Collective Action on Climate Resilience

Claims Volume Up 36% in 2024; Climate, Costs, Litigation Drive Trend

Data Fuels the Assault on Climate-Related Risk

Outdated Building Codes Exacerbate Climate Risk

JIF 2024: Collective, Data-Driven Approaches Needed to Address Climate-Related Perils

Catastrophes, Coastal Property, Disaster Resilience, Flood Insurance, Floods, Homeowners Insurance, Insurers and the Economy, Market Conditions, Risk Management

BRIC Funding Loss Underscores Need
for Collective Action
on Climate Resilience

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The Trump Administration’s unwinding of the Building Resilient Infrastructure and Communities (BRIC) program and cancellation of all BRIC applications from fiscal years 2020-2023 reinforce the need for collaboration among state and local government and private-sector stakeholders in climate resilience investment.

Congress established BRIC through the Disaster Recovery Reform Act of 2018 to ensure a stable funding source to support mitigation projects annually. The program has allocated more than $5 billion for investment in mitigation projects to alleviate human suffering and avoid economic losses from floods, wildfires, and other disasters. FEMA announced on April 4 that it is ending BRIC .

Chad Berginnis, executive director of the Association of State Floodplain Managers (ASFPM), called the decision “beyond reckless.”

 “Although ASFPM has had some qualms about how FEMA’s BRIC program was implemented, it was still a cornerstone of our nation’s hazard mitigation strategy, and the agency has worked to make improvements each year,” Berginnis said. “Eliminating it entirely — mid-award cycle, no less — defies common sense.”

While the FEMA press release called BRIC a “wasteful, politicized grant program,” Berginnis said investments in hazard mitigation programs “are the opposite of ‘wasteful.’ “ He pointed to a study by the National Institute of Building Sciences (NIBS) that showed flood hazard mitigation investments return up to $8 in benefits for every $1 spent. 

“At this very moment, when states like Arkansas, Kentucky, and Tennessee are grappling with major flooding, the Administration’s decision to walk away from BRIC is hard to understand,” Berginnis said.

Heading into hurricane season

Especially hard hit will be catastrophe-prone Florida. Nearly $300 million in federal aid meant to help protect communities from flooding, hurricanes, and other natural disasters has been frozen since President Trump took office in January, according to an article in Government Technology.

The loss of BRIC funding leaves dozens of Florida projects in limbo, from a plan to raise roads in St. Augustine to a $150 million effort to strengthen canals in South Florida. According to Government Technology, the agency most impacted is the South Florida Water Management District, responsible for maintaining water quality, controlling the water supply, ecosystem restoration and flood control in a 16-county area that runs from Orlando south to the Keys.

“The district received only $6 million of its $150 million grant before the program was canceled,” the article said. “The money was intended to help build three structures on canals and basins in North Miami -Dade and Broward counties to improve flood mitigation.”

Florida’s Division of Emergency Management must return $36.9 million in BRIC money that was earmarked for management costs and technical assistance. Jacksonville will lose $24.9 million targeted to raise roads and make improvements to a water reclamation facility.

FEMA announced the decision to end BRIC the day after Colorado State University’s (CSU) Department of Atmospheric Science released a forecast projecting an above-average Atlantic hurricane season for 2025. Led by CSU senior research scientist and Triple-I non-resident scholar Phil Klotzbach CSU research team forecasts 17 named storms, nine hurricanes – four of them “major” (Category 3, 4, or 5).  A typical season has 14 named storms, seven hurricanes – three of them major.

Nationwide impacts

More than $280 million in federal funding for flood protection and climate resilience projects across New York City — “including critical upgrades in Central Harlem, East Elmhurst, and the South Street Seaport” – is now at risk, according to an article in AMNY. The cuts affect over $325 million in pending projects statewide and another $56 million of projects where work has already begun.

Senate Majority Leader Chuck Schumer and Gov. Kathy Hochul warned that the move jeopardizes public safety as climate-driven disasters become more frequent and severe.

“In the last few years, New Yorkers have faced hurricanes, tornadoes, blizzards, wildfires, and even an earthquake – and FEMA assistance has been critical to help us rebuild,” Hochul said. “Cutting funding for communities across New York is short-sighted and a massive risk to public safety.”

According to the National Association of Counties, cancellation of BRIC funding has several implications for counties, including paused or canceled projects, budget and planning adjustments, and reduced capacity for long-term risk reduction.

North Dakota, for example, has 10 projects that were authorized for federal funding. Those dollars will now be rescinded. Impacted projects include $7.1 million for a water intake project in Washburn; $7.8 million for a regional wastewater treatment project in Lincoln; and $1.9 million for a wastewater lagoon project in Fessenden. 

“This is devastating for our community,” said Tammy Roehrich, emergency manager for Wells County. “Two million dollars to a little community of 450 people is huge.”

The cancellation of BRIC roughly coincides with FEMA’s decision to deny North Carolina’s request to continue matching 100 percent of the state’s spending on Hurricane Helene recovery.

“The need in western North Carolina remains immense — people need debris removed, homes rebuilt, and roads restored,” said Gov. Josh Stein. “Six months later, the people of western North Carolina are working hard to get back on their feet; they need FEMA to help them get the job done.”

Resilience key to insurance availability

Average insured catastrophe losses have been on the rise for decades, reflecting a combination of climate-related factors and demographic trends as more people have moved into harm’s way.

“Investing in the resilience of homes, businesses, and communities is the most proactive strategy to reducing the damage caused by climate,” said Triple-I Chief Insurance Officer Dale Porfilio. “Defunding federal resilience grants will slow the essential investments being made by communities across the U.S.”

Flood is a particularly pressing problem, as 90 percent of natural disasters involve flooding, according to the National Flood Insurance Program (NFIP). The devastation wrought by Hurricane Helene in 2024 across a 500-mile swath of the U.S. Southeast – including Florida, Georgia, the Carolinas, Virginia, and Tennessee – highlighted the growing vulnerability of inland areas to flooding from both tropical and severe convective storms, as well as the scale of the flood-protection gap in non-coastal areas.

Coastal flooding in the U.S. now occurs three times more frequently than 30 years ago, and this acceleration shows no signs of slowing, according to recent research. By 2050, flood frequency is projected to increase tenfold compared to current levels, driven by rising sea levels that push tides and storm surges higher and further inland.

In addition to the movement of more people and property into harm’s way, climate-related risks are exacerbated by inflation (which drives up the cost of repairing and replacing damaged property); legal system abuse, (which delays claim settlements and drives up insurance premium rates); and antiquated regulations (like California’s Proposition 103) that discourage insurers from writing business in the states subject to them.  

Thanks to the engagement and collaboration of a range of stakeholders, some of these factors in some states are being addressed. Others – for example, improved building and zoning codes that could help reduce losses and improve insurance affordability – have met persistent local resistance.

As frequently reported on this blog, the property/casualty insurance industry has been working hard with governments, communities, businesses, and others to address the causes of high costs and the insurance affordability and availability challenges that flow from them. Triple-I, its members, and partners are involved in several of these efforts, which we’ll be reporting on here as they progress.

Learn More:

Tariff Uncertainty May Strain Insurance Markets, Challenge Affordability

Claims Volume Up 36% in 2024; Climate, Costs, Litigation Drive Trend

Triple-I Brief Highlights Rising Inland Flood Risk

Tenfold Frequency Rise for Coastal Flooding Projected by 2050

Hurricane Helene Highlights Inland Flood Protection Gap

Removing Incentives for Development From High-Risk Areas Boosts Flood Resilience

Executive Exchange: Using Advanced Tools to Drill Into Flood Risk

Insurers and the Economy, Legal Environment, Market Conditions, Regulation, Risk Management

Claims Volume Up 36%
in 2024; Climate, Costs, Litigation Drive Trend

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By Lewis Nibbelin, Contributing Writer, Triple-I

U.S. property claims volume rose 36 percent in 2024, propelled by a 113 percent increase in catastrophe claims, according to a recent Verisk Analytics report.

While evolving climate risks fueled claim frequency, uncertain inflation trends and unchecked legal system abuse will likely further strain insurer costs and time to settle these claims, posing risks to coverage affordability and availability.

Abnormally active Atlantic hurricane season

In a “dramatic shift” from previous loss patterns, late-season hurricane activity – rather than winter storms – dictated fourth-quarter claims operations last year, Verisk reported. Hurricane-related claims comprised nearly 9 percent of total claims volume, at a staggering 1,100 percent increase from the third quarter of 2023. Flood and wind claims both also jumped by 200 percent in volume.

“This shift in risk patterns demands new approaches to risk assessment and resource planning, particularly in the Southeast, where costs increased at six times the national rate following hurricane activity,” Verisk stated. Notably, Hurricane Milton generated roughly 187,000 claims totaling $2.68 billion in replacement costs across the Southeast, with 8 percent of claims still outstanding as of the report’s release.

Another above-average hurricane season is projected for 2025 in the Atlantic basin, according to a forecast by Colorado State University’s (CSU) Department of Atmospheric Science. Led by CSU senior research scientist and Triple-I non-resident scholar Phil Klotzbach, the CSU research team forecasts 17 named storms, including nine hurricanes – four of them “major” – during  the 2025 season, which begins June 1 and continues through Nov. 30. A typical Atlantic season has 14 named storms, seven hurricanes, three of them major. Major hurricanes are defined as those with wind speeds reaching Category 3, 4, or 5 on the Saffir-Simpson Hurricane Wind Scale.

Water, hail, and wind events in the Great Plains and Pacific Northwest also contributed to unexpected claim volumes, Verisk added. In contrast, wind-related claims fell in the Northeast compared to the fourth quarter of 2023.

Such regional variations highlight “the importance of granular, location-specific analysis for accurate risk assessment,” Verisk stated.

Contributing economic factors

Labor and material costs continued to rise year over year, with commercial reconstruction costs seeing a more pronounced increase of 5.5 percent compared to residential’s 4.5 percent, Verisk reported. The firm projected moderate reconstruction cost increases within both sectors during the first half of 2025.

Looming U.S. tariffs, however, may complicate this trajectory. Inflationary pressures related to the Trump Administration’s tariffs could further disrupt supply chains still recovering from natural catastrophes and the COVID-19 pandemic. Any such disruptions would compound replacement costs for U.S. auto and homeowners insurers as material costs – such as lumber, a major import from Canada – become even more expensive.

Excessive litigation trends

Similarly, excessive claims litigation – which prolongs claims disputes while driving up claim costs – plagues several of the states Verisk identified as experiencing increased claim volumes. For instance, though hurricane activity helps explain higher claim frequency in Georgia, the Peach State also is home to a personal auto claim litigation rate more than twice that of the median state, with a relative bodily injury claim frequency 60 percent higher than the U.S. average.

Verisk’s preliminary Q4 data reveals a 7 percent decrease in average claims severity compared to the same period in 2023 – a figure the firm expects to rise as more complex claims reach completion. But costly and protracted claims litigation, paired with ongoing tariff uncertainty, could magnify this figure even beyond their projections.

Undoubtedly, both will challenge insurers’ capacity to reliably predict loss trends and set fair and accurate premium rates for the foreseeable future, underscoring Verisk’s point that “staying ahead of these evolving patterns is essential in building more resilient operations in the future.”

Learn More:

Tenfold Frequency Rise for Coastal Flooding Projected by 2050

How Tariffs Affect P&C Insurance Prospects

What Florida’s Misguided Investigation Means for Georgia Tort Reform

Florida Bills Would Reverse Progress on Costly Legal System Abuse

Florida Reforms Bear Fruit as Premium Rates Stabilize 

Georgia Targets Legal System Abuse

Severe Convective Storm Risks Reshape U.S. Property Insurance Market

New Triple-I Issue Brief Puts the Spotlight on Georgia’s Insurance Affordability Crisis

P/C Replacement Costs Seen Outpacing CPI in 2025

California Insurance Market at a Critical Juncture

Florida’s Progress in Legal Reform: A Model for 2025

Louisiana Reforms: Progress, But More Is Needed to Stem Legal System Abuse

Data Fuels the Assault on Climate-Related Risk

California Finalizes Updated Modeling Rules, Clarifies Applicability Beyond Wildfire

U.S. Consumers See Link Between Attorney Involvement in Claims and Higher Auto Insurance Costs

Auto Insurance, Insurance Industry, Risk Management

IRC report reveals that one in three drivers were either uninsured or underinsured in 2023. 

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In 2023, despite nearly universal legal requirements to have auto insurance, more than one in seven drivers (15.4 percent) nationally were uninsured, and more than one in six drivers (18.0 percent) were underinsured, according to the new report, Uninsured and Underinsured Motorists: 2017–2023, by the Insurance Research Council (IRC), affiliated with The Institutes. Across the fifty states and the District of Columbia, one in three drivers (33.4 percent) were either uninsured or underinsured in 2023, a 10 percentage point increase in the combined rate since 2017.  

Using data submitted by 17 insurers — representing approximately 55 percent of the private passenger auto insurance market countrywide — this latest report estimated the prevalence of uninsured (UM) and underinsured (UIM) by comparing the frequency of UM claims and UIM claims, respectively, to the frequency of bodily injury (BI) claims. Findings included an analysis of trends and contributing factors to variations in UM and UIM rates across states. 

The IRC analyzed UM, UIM, and BI liability exposure and claim count data from participating companies for 2017 through 2023. Because of the disruption of the pandemic shutdowns, the changes over time were split into three periods (details outlined in the report).  

Key IRC findings include:  

  • UM rates varied substantially across the nation (50 states and the District of Columbia) 
  • Nearly every state saw a rise in the UM rate in 2020 with the onset of the pandemic, but the experience from 2020 to 2023 was mixed.  
  • Every state, except for New York and the District of Columbia, experienced a rise in UIM rate between 2017 and 2023.  
  • Many states with high UM rates often also have high UIM rates. However, some jurisdictions, such as Nevada and Louisiana, combine below-average UM rates with high UIM rates, while others, such as the District of Columbia, have high UM rates but low UIM rates.  
  • Several factors, including economic factors, insurance costs, and state insurance laws and regulations, are associated with variations in UM and UIM rates across states. 

After the initial shock of the pandemic, the UM rate increased steadily. 

Before the disruption of the COVID-19 pandemic, UM rates were falling in most states. From 2017 to 2019, only 11 jurisdictions saw an increase. UM claim frequency fell slightly in 2020 to 0.11 claims per 100 insured vehicles, but the decline was much smaller than the drop in BI claim frequency. UM claim frequency recovered quickly and, in the years since 2020, has grown faster than BI claim frequency (39 percent compared with 29 percent).   

As a result, the UM rate has increased steadily, reaching 15.4 percent in 2023. The range of the UM rates spanned from a low of 5.7 percent in Maine to a high of 28.2 percent in Mississippi. Outliers include eight states with UM rates above 20 percent and 11 states with rates lower than 10 percent.  

States with above-average BI claim frequency and UM claim frequency tended to have higher UM rates. Yet, some states with low UM claim frequency rates have a relatively high UM rate. In Michigan, for example, strict no-fault rules limit the number of BI claims, so the ratio of UM-to-BI claim frequencies is high. Lower UM rates tended to occur in states with higher income, lower unemployment rates, lower insurance expenditures, low minimum limits, and a lack of stacking provisions.  

UM rates were higher in states that don’t require UIM coverage. In 2023, the UM rate was 14.9 percent in states that do not require UIM insurance, compared with 11.6 percent in states that require it. Where UIM coverage isn’t required by law, UM rates were significantly higher in the years captured in this study, with the rate in 2023 at 18.9 percent in states that don’t require UIM insurance, compared with 13.3 percent in states that require it.   

Nearly one in five accidents with injuries involved losses more than the at-fault driver’s coverage limits. 

Over the study period, nearly every jurisdiction experienced an increase in its UIM rate. The only exceptions were a small decline (0.9%) in the District of Columbia and a 6.6 percent decline in New York. The largest increase occurred in Colorado, where the UIM rate rose 24.4 percentage points. Other states with above-average increases included Michigan, Kentucky, and Georgia.  

UIM claim frequency showed a small increase between 2017 and 2019 before dropping slightly in 2020. In the years since the onset of the pandemic, with the severity of auto injury claims on the rise, UIM claim frequency has increased markedly, reaching 0.17 claims per 100 insured vehicles in 2023. Since 2020, the growth in UIM claim frequency was double the growth in BI frequency. As a result, the UIM rate has increased significantly, rising to 18.0 percent in 2023.  

IRC analysis showed that characteristics associated with lower UIM rates included higher income, lower unemployment rates, lower insurance expenditures, high or medium minimum limits, lack of stacking provisions, and use of a limits trigger for UIM coverage rather than a damages trigger. States with high UM rates often also have high UIM rates. Florida, Colorado, and Michigan all rank relatively high for both measures, while Maine, Massachusetts, and Nebraska all rank relatively low.  

“The increase in UIM rates points to higher UIM premiums in the future, worsening affordability and potentially increasing the likelihood of more uninsured drivers. This demonstrates the complex interconnectedness of these two coverages as insurers protect consumers from insufficient coverage by at-fault drivers,” said Dale Porfilio, president of the IRC and chief insurance officer at the Insurance Information Institute (Triple-I). 

While state laws regarding mandatory requirements for uninsured and underinsured motorists vary, nearly all states have a legislation framework that requires all drivers to have some auto liability insurance to drive a motor vehicle. Drivers in most states are also required to purchase additional protection to provide coverage if the at-fault driver cannot afford to pay for the damage they caused. However, legislators in several states have enacted “no pay, no play” laws, which ban uninsured drivers from suing for noneconomic damages such as pain and suffering. A handful of states have programs to assist lower-income drivers, and drivers can check with their state’s insurance division to see if they are eligible.  

To learn more about UM/UIM trends, read the IRC report, Uninsured and Underinsured Motorists: 2017–2023, and check out the Triple-I Backgrounder on Compulsory Auto/Uninsured Motorists. 

Auto Insurance, Homeowners Insurance, Insurance Industry, Regulation, Risk Management

New Triple-I Issue Brief Puts the Spotlight on Georgia’s Insurance Affordability Crisis

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Insurance affordability in Georgia is dwindling as claim frequency and insurer costs soar, according to the latest issue brief from Insurance Information Institute (Triple-I), Trends and Insights: Georgia Insurance Affordability.  

Given the state’s below-average income vs. above-average insurance expenditures, Georgia ranks 42nd on the list of affordable states for homeowners insurance and 47th (plummeting from the 2006 high of 27th) for personal auto affordability, according to reports by the Insurance Research Council. This brief provides an overview of how several factors, including skyrocketing costs from litigation, pose risks to coverage affordability, availability, and other potential economic outcomes for Georgia residents. Tort reform is discussed as a legislative solution to the challenge of legal system abuse – excessive policyholder or plaintiff attorney practices that increase costs and time to settle insurance claims. 

The Georgia insurance market grapples with multiple risk factors 

From 1980–2024, Georgia was impacted by 134 confirmed weather/climate disaster events in which losses exceeded $1 billion each. At least 38 of those events happened in the last five years, with 14 in 2023. Homeowners in Georgia’s most climate-risk-vulnerable counties, such as the coastal and most southern parts of the state, can face double-digit premium hikes or nonrenewals. Also, data indicates the rate of underinsured motorists in Georgia is twice as high as the national average, and the rate of uninsured motorists is 25 percent higher. Injury claim severity in the state is slightly higher than in the rest of the country.   

Data indicates that litigation costs have become a pervasive concern for risk management. 

Rising claim frequency and litigation costs put coverage affordability and availability at risk. For example, the IRC findings across personal auto lines show a dual trend in Georgia of increased claims and litigation. Property damage liability claims per 100 insured vehicles are 15 percent higher, and relative body injury claims frequency is 60 percent higher. According to IRC, the rate for private passenger litigation in Georgia is nearly three times that in the median state. 

The Georgia Office of Commissioner of Insurance and Safety Fire (“OCI”) reviewed all lines across personal and commercial auto, personal and commercial umbrella, and commercial general liability (homeowners liability was excluded). The five-year average count for liability claims increased 24.9 percent (2014 – 2018 at 583,756 vs. 2019-2023 at 729,191). A rising percentage of claims with payment are full-limit claims, and the OCI analysis indicates litigation is driving that increase. While costs rose for both litigated and non-litigated claims, the number of claims with legal involvement dominated paid indemnity for most lines of business, and litigated claims comprised a growing portion of the total paid indemnity. 

Attorneys appear to have revved up their mining for lawsuits in Georgia. Law firms spent $160 million on advertising in Georgia, according to preliminary data from the American Tort Reform Association (ATRA). Outdoor ads for lawsuits increased by 119 percent in GA during that time. It might not be a surprise then to see that the Georgia OCI report shows legal (attorney involved) claims dominated Personal Auto claims for Bodily Injury, comprising 62 percent of claims and 86 percent of total indemnity paid for closed claims in Accident Year 2023. A review of losses of $1 million or more by accident year that have closed during the 2014 to 2023 period shows that each accident year cohort surpasses the count from the previous accident years.   

Recently introduced state tort reform legislation may help to stabilize insurance costs. 

Analysts estimate that litigation costs Georgia residents $880 million annually, or an average of $1,415 per resident.  Sean Kevelighan, Triple-I CEO, says “understanding how these trends drive up costs and identifying policy levers for tort reform legislation can ultimately bring positive outcomes for Georgia’s economy and its consumers and business owners.” 

As part of our commitment to educating stakeholders, Triple-I has launched a multi-faceted campaign to raise awareness of the mounting costs of legal system abuse in Georgia and other states. We invite you to view the video statement by our CEO Sean Kevelighan, interviews capturing the opinions of consumers about legal system abuse, and read the full issue brief, Trends and Insights: Georgia Insurance Affordability. 

Catastrophes, Coastal Property, Disaster Resilience, Floods, Risk Management

Parametric Insurance Gains Traction Across U.S.

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By Lewis Nibbelin, Contributing Writer, Triple-I

Heading into 2025, countless communities are still grappling with the $27 billion natural disasters that impacted the United States last year – a total driven by costly storms and severe inland flooding. Many affected residents lacked flood coverage and will rely almost exclusively on federal relief funding to recover, underscoring a widespread protection gap.

Aiming to expedite disaster recovery for riverine communities in the Mississippi River Basin, the Mississippi River Cities and Towns Initiative (MRCTI) recently announced a flood insurance pilot currently in development with Munich Re that will use parametric insurance.

Unlike traditional indemnity insurance, parametric structures cover risks without sending adjusters to evaluate post-catastrophe damages. Rather than paying for specific damages incurred, parametric policies issue agreed-upon payouts if certain conditions are met – for example, if wind speeds or rainfall measurements meet an established threshold. Speed of payment and reduced administration costs can ease the burden on both insurers and policyholders, especially as weather and climate risks become more severe and unpredictable.

Several insurers demonstrated this efficiency in the wake of last year’s hurricanes – among them climate risk-management firm Arbol, which paid out $20 million in parametric reinsurance claims within 30 days after Milton made landfall.

Coast-to-coast trends

Though the MRCTI pilot presents a novel approach to inland flooding, similar pilots are already underway along the coast. New York City developed its own parametric flood program following Superstorm Sandy to bolster the resilience of low- and moderate-income neighborhoods struggling to recover. The program received enough funding last year not only for renewal but expansion, bringing needed protection to even more vulnerable communities.

For flood-prone Isleton, Calif. – a small Sacramento County town that lacks the resources to support a police department – risk mitigation has long taken a backseat to more immediate concerns. But the city’s location in a floodplain made it the perfect candidate for California’s parametric flood pilot, backed by a two-year, $200,000 grant going into effect this year.

The emergence of these community flood solutions reflects a growing interest in parametric insurance throughout the U.S., which propelled the $18 billion value of the global parametric insurance market in 2023. From Lloyd’s first dedicated parametric syndicate to Amwins’ parametric program for golf courses, more parametric coverage options are available than ever before, particularly after numerous private carriers – emboldened by improved data analytics and modeling – expanded their parametric flood insurance business in the U.S. last year.

Take FloodFlash, a leading parametric flood insurance provider based in London. Initially limited to five states, FloodFlash became known for offering coverage beyond the National Flood Insurance Program’s (NFIP) limits and in areas traditionally unsupported by private markets. Increased broker demand motivated the company, in partnership with Munich Re, to gradually roll out coverage to all mainland states last year, ahead of active hurricane season forecasts.

New insurance startups like Ric are also lowering the cost of entry into innovative parametric-based resilience. A winner of the RISE Flood Insurance of the Future Challenge, Ric will launch later this year on the coasts with micro-policies ranging from $14 to $50 per month. The company plans to collaborate with employers to extend their policies as employee benefits, which could help raise awareness of and reduce coverage gaps.

Regulatory momentum

As parametric risk transfer continues to gain traction, regulatory uncertainty in the absence of corresponding insurance laws persists. Given that many jurisdictions have structured their legal insurance framework around traditional indemnity principles, it’s unclear how restrained insurers in some areas are to issuing payouts only for actual losses.

Determining appropriate thresholds for coverage poses another challenge. For example, following extensive devastation from Hurricane Beryl last year, a $150 million parametric catastrophe bond did not yield a payout because air pressure levels narrowly missed the predefined minimum. The ensuing backlash included an intergovernmental “examination” into insurance-linked securities broadly and sparked industry-wide debate surrounding the equity of parametric structures.

To date, only a handful of states have enacted parametric insurance legislation, though substantial movement last year suggests more regulations are on the horizon. Notably, Vermont updated its previous 2022 law permitting captive insurance companies to enter parametric contracts. Based on evidence of their utility as insurance contracts, parametric contracts are now less restricted.

New York also unanimously passed its first parametric insurance law, recognizing parametric coverage as an authorized form of personal line insurance within the state. The law further stipulates mandatory disclosures on all parametric applications that distinguish parametric insurance as less comprehensive, and therefore not a substitute for, traditional property and flood insurance.

Such regulations are a promising step forward towards refining parametric coverage and facilitating its adoption across the country, but tensions between parametric and indemnity risk structures remain largely unresolved. Navigating how parametric insurance functions alone or as part of a package including indemnity coverage will require more collective input from all industry stakeholders.

One thing is for certain: traditional risk-transfer mechanisms are no longer sufficient to address the risk crisis presented by our evolving climate. Tools like parametric insurance – paired with hazard mitigation and community resilience planning – are guiding the way forward.

Learn More:

Rising Interest Seen in Parametric Insurance

Hurricane Delta Triggered Coral Reef Parametric Insurance

Mangrove Insurance: Parametric + Indemnity May Aid Coastal Resilience

Catastrophes, Disaster Resilience, Floods, Risk Management, Technology, Wildfire

Data Fuels the Assault
on Climate-Related Risk

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By Lewis Nibbelin, Contributing Writer, Triple-I

Identifying opportunities to mitigate climate risk was on the minds of “Risk Take” presenters at Triple-I’s 2024 Joint Industry Forum (JIF). Risk Takes – a new addition at JIF – are 10-minute problem/solution-oriented presentations by high-impact experts who are deeply engaged in addressing specific perils. 

Inserted between panel discussions of broader issues and trends, these compact talks were tightly focused on how current challenges are being met.

Munich Re US, for example, is diving deep into understanding how consumers and insurers perceive climate-related risks. According to RiskScan 2024, a recently published survey by Munich Re US and Triple-I, more than one-third of respondents ranked climate change as a top concern, identifying it as “a key driver of insurance costs,” said Kerri Hamm, EVP and head of cyber underwriting, client solutions, and business development at Munich Re US.

However, when it comes to flood risk, the survey highlighted a substantial disconnect between concern about the peril and understanding of related insurance coverage. Despite understanding the rising severity of climate risks and their direct influence on insurance costs, many consumers erroneously believe their homeowners policy includes flood coverage or that they do not reside in an area at risk of flooding, contributing to a significant flood protection gap.

High-risk areas are only expanding, Hamm pointed out, as upsurges in flash flooding implicate more and more noncoastal properties. Increased private-sector interest in flood risk has led to new forms of flood coverage, such as a private Inland Flood Endorsement offered at Munich Re, to support these properties. Take-up rates for these insurance products remain low – underscoring the importance of consumer education and improved training for agents and brokers to encourage flood insurance sales.

“We can do better as an industry to make options available, attractive, and better known to vulnerable homeowners,” Hamm said. Education is vital, as is “developing innovative solutions that benefit our society by closing the insurance gap.”

Combining geoscience with data science is one solution, said Helge Jørgensen, CEO and co-founder of the Norway-based 7Analytics. Jørgensen discussed how, by leveraging geological and hydrological information with machine learning technology, his company develops granular data that can map out property flood risk “neighbor by neighbor,” enabling highly representative flood policies.

Beyond incentivizing private insurers to write flood coverage, this data is further “crucial for communities,” Jørgensen stressed, “because, if you have a lot of information on which areas and buildings are more exposed to flooding, then you can build resilience.”

Urban growth, particularly rising populations in higher-risk areas, render community-level resilience initiatives even more important, he noted.

Guidewire’s Christina Hupy reinforced Jørgensen’s emphasis on utilizing granular data while discussing HazardHub, a property risk data platform owned by Guidewire.

“Historically, risk data was provided only at the Census block or even ZIP code level,” Hupy said, whereas HazardHub provides comprehensive and updated geospatial data across various perils to pinpoint individual property risk levels.

In collaboration with Triple-I, HazardHub will release a report in early 2025 focusing on wildfire risk within three high-risk California counties, aiming to demonstrate how using detailed geographic data can help sustain or improve underwriting profitability within such areas.

“We’re going to need to look at mitigation in these high-risk areas as the next frontier,” Hupy said, “to spark that interest from California government and carriers” and enhance resilience “both from a customer and a business perspective” in the state.

California’s Department of Insurance helped launch this frontier last month by announcing new regulations allowing insurers to use catastrophe risk modeling to set rates, rather than limiting insurers to only historic risk data, as was the rule for decades. Insurers must also expand their coverage in riskier areas and account for resilience efforts when setting rates, which was also not previously possible.

Alongside emerging forms of insurance coverage and innovative granular data tools, such regulations empower the insurance industry to incentivize climate risk mitigation and achieve considerable progress towards eliminating the protection gap.

Learn More:

RiskScan 2024 Reveals Risk Priorities Across the Insurance Marketplace

JIF 2024: What’s In a Name? When It Comes to Legal System Abuse, A Lot

JIF 2024: Collective, Data-Driven Approaches Needed to Address Climate-Related Perils

JIF 2024: What Resilience Success Looks Like

JIF 2024: Panel Highlights Human-Centered Use of Advanced Technology

Climate Resilience and Legal System Abuse Take Center Stage in Miami