Americans for Insurance Reform, a consumer advocacy group, has released a new report regarding the property/casualty insurance industry in New York. The report accuses P/C insurers of excessive rate increases that have slowed the financial recovery of individuals and businesses in the wake of the 2008 economic recession. The group argues that these needlessly high rates may be leading to a new liability insurance crisis in the U.S., one that may set the economy back even further.
The group claims that the insurance market throughout the U.S. has been “soft” for the past five years, meaning that prices have remained stable or have been dropping throughout the country. The report postulates that the insurance industry is working to push the country into a “hard” market by raising rates for coverage. As one company raises rates, other companies feel the need to do the same, which results in widespread rate increases.
Insurers, however, argue that higher rates are absolutely necessary due to the impact of natural disasters in 2011 along with new insurance regulations. The Insurance Information Institute decries the report as being flawed. The Institute asserts that the insurance industry is highly competitive and that regulations and growing catastrophe claims are a major factor in the price of insurance coverage. According to the Institute, the industry has paid more than $200 billion in catastrophe claims since 2004. Without higher rates, the industry would be destabilized by these events and fewer people would have access to coverage.