Cyrus Dugger

Commercial Insurance Rates Continue to Fall While Insurer Profits Skyrocket to Record Levels

A new report from Americans For Insurance Reform.

NEW YORK — The latest industry data provide continuing evidence that the skyrocketing insurance rates of 2000 to 2003 have led to record industry profits but commercial insurance rates have stabilized or dropped in almost every sector, including medical malpractice. According to J. Robert Hunter, Director of Insurance for the Consumer Federation of America, co-founder of Americans for Insurance Reform and former Texas Insurance Commissioner and Federal Insurance Administrator, “this drop in prices has been underway for three years as the country experiences a sustained soft market.”

The current soft market (falling rates) follows a hard market (large price hikes) that hit most lines of
insurance in the early 2000s, particularly medical malpractice. Said Hunter, “It now appears clear that
the industry’s record profits in 2004 and 2005, and the exceptional record profit about to be reported
for 2006, are due in large part to the years of huge rate hikes in the earlier part of the decade, which
were not caused by any accompanying increase in claims or payouts. In fact, inflation-adjusted payouts
and claims never increased at all during this period. Rather, this is all part of a well-documented
cyclical phenomenon for the property/casualty insurance industry.”

If you or your organization is interested in learning more about or working on these types of civil justice issues, please feel free to contact me at cdugger@drummajorinstitute.org.

Cyrus Dugger
Senior Fellow in Civil Justice
Drum Major Institute for Public Policy

Posted at 9:53 AM, Oct 26, 2006 in Permalink | Comments (0) | TrackBack (0)