Americans for Insurance Reform (AIR), a coalition of nearly 100 consumer and public interest groups representing more than 50 million people, has produced a major new study called “Repeat Offenders: How The Insurance Industry Manufactures Crises And Harms America.” The study exposes how the property/casualty insurance industry creates periodic crises where insurance becomes unaffordable or unavailable for everyone from doctors to small businesses to local governments. These crises are known as “hard markets.”


“Repeat Offenders” finds that in the last few months, industry executives have been pushing the industry, including pressuring their own competitors, to start raising rates again for businesses and professionals, setting the stage for a new liability insurance crisis in America. It also finds that hard markets, when premiums suddenly skyrocket as they have done three times in the past 35 years, are caused by “a combination of the industry’s own boom and bust economic cycle, anti-competitive (yet legal) underwriting practices, unique and opaque accounting policies, and virtually unchecked power when it comes to regulation of insurance rates.”
Moreover, say the authors, “while the existence of this self-made cycle is clear to insurance industry insiders, insurers often publicly deny the cycle’s existence while their lobbyists try to take advantage of skyrocketing rates to push for so-called ‘tort reform.'” However, they say, “these cycles are national in scope and occur in every state irrespective of a state’s ‘tort’ law. Because the legal system is not responsible for creating hard markets, enactment of so-called ‘tort reform’ has done nothing to prevent them.” The authors quote numerous insurance insiders freely discussing this cycle and never referencing lawsuits or tort system costs as a cause for rate hikes.
“Repeat Offenders” also finds that:

  • This country has been in a “soft” insurance market since 2006, with rates stable and dropping in every state whether or not “tort reforms” have been enacted. However, since early 2011, the insurance industry has been trying to push the country into a new hard market.
  • Hurricane Irene in late August 2011, which was greatly hyped by the Weather Channel but wasn’t nearly the catastrophe that was expected, has been used by insurance industry representatives to push the country into a new hard market. This is despite the fact that the industry is perfectly able to handle those claims in addition to having stored away excess profits for decades so that today, it is in an all-time safe position. Creation of a hard market now would be purely for the purpose of price-gouging buyers of insurance, particularly commercial lines insureds.
  • Over the last few months in particular, industry executives – including unregulated foreign reinsurers – have been boldly declaring to the entire industry that it is time to end the soft market (including pressuring their own competitors to start raising rates), setting the stage for a new liability insurance crisis in this country.

Click to read “Repeat Offenders.”

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