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The current insurance pricing environment will likely continue as insurers contend with rising loss costs due to inflation, higher court awards and climate-driven claims, Chubb Ltd. Chairman and CEO Evan Greenberg said Tuesday.
While inflation may slow for some property exposures, casualty rates will need to continue rising as litigation increases, he said during his keynote presentation at Riskworld, the Risk & Insurance Management Society Inc.’s annual conference in Atlanta.
Meanwhile, the use of artificial intelligence is set to expand in the insurance sector, Mr. Greenberg said.
“We’re in the midst of a reinsurer-turbocharged hard market in property,” he said.
Rising reinsurance pricing and reduced capacity are forcing insurers to retain more exposure and volatility, Mr. Greenberg said.
“At my company, we’re fully prepared to take more risk thoughtfully and within reason, as long as we can earn a reasonable risk-adjusted return,” he said.
But public policy in the United States, where some regulators in catastrophe-exposed states are curbing increases in insurance rates, could create tensions, Mr. Greenberg said.
“If states deny insurers the ability to price adequately or tailor coverage appropriately or deny them the flexibility to manage their concentration of risk, insurers will simply shut exposure, which threatens the availability of private sector insurance,” he said.
Loss cost inflation will likely ameliorate for property risks this year as inflation declines, but liability lines will continue to face higher losses as liability awards and settlements expand and rise, Mr. Greenberg said.
“Casualty rates in most classes will need to rise at an accelerated rate to reflect loss cost trends,” he said.
Meanwhile, Chubb has been experimenting with AI for the past five years in underwriting and claims and is set to start expanding its use across lines and geographies, Mr. Greenberg said.
The technology adds insights and removes the need for “wasteful” work, he said.
“It’s making people’s jobs more meaningful, more fulfilling. Yes, we’ll require less labor ultimately, but it’ll be higher-skilled labor, better-compensated labor,” Mr. Greenberg said.
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