According to a new report published by Insurance Information Institute, American auto and homeowners insurance policies were unable to match the current inflation rates. As a result, Triple-I’s report warns that if losses and expenses keep up at this rate, insurers are running the risk of insolvency. Insolvency is when a company is no longer able to comply with its debt commitments.
Beyond claims payouts
What was interesting about this new insurance report is that it mentions not just the claims that are paid by insurers, but also the function of insurers as employers that participate in paying labor costs and all professional functions.
These functions include all supplies and energy costs. For insurers to stay successfully in business, there must be profitable earnings. Factors like the recurrence and density of auto claims made, and the requirement of attorney participation has only assisted in the continued spike to auto insurance policy costs.
What agents need to know
Right now, it’s important for professional insurance agents to take note and track profit warnings for the insurance companies for which they do business. A company’s carrier rating also can be an indicator its financial condition.
PIA member benefit. If you want an easy way to monitor your carriers’ ratings, sign up for PIA’s Company Rating Tracking Service, which is available exclusively to PIA members. Once you sign up for this service, you will receive an email from PIA when one of your represented carrier’s AM Best rating changes.
To participate, contact PIA’s Industry Resource Center by phone at (800) 424-4244 or by email at email@example.com with a listing of the carriers your agency represents. Please note: This alert is a product of PIA and is not affiliated with any service provided by AM Best.