A key committee of the National Association of Insurance Commissioners has agreed to expand its review of property/casualty insurance market conditions to include an analysis of the root causes of those conditions, according to the American Insurance Association.
On the last day of the NAIC’s fall meeting, the full Property and Casualty (C) Committee agreed to add “studying market conditions” to its charges. This was a direct response to a recent letter to state insurance commissioners from the Americans for Insurance Reform (AIR), which calls itself a consumer group. The letter made numerous observations, inferences, and reportedly flawed conclusions regarding the insurance market, and demanded specific actions by state insurance regulators.
AIA Assistant General Counsel David Snyder was the only industry representative who made comments about the new charge.
Specifically, Snyder said, “AIA believes that state insurance regulators, for the most part, are responding prudently to recent market developments, so there is no need to add any new charges to the C Committee regarding market conditions or distressed lines. However, if the Committee is determined to do so, it is imperative that the root causes of current market conditions be analyzed.
“Rising premium costs during the past few years are primarily a consequence of underlying negative trends in claim costs and a drop in investment income, with other tragic and aggravating factors, including the September 11 tragedy. Terrorism exposures, rising medical and legal costs, reinsurance availability and the recent serious lack of profitability in some lines also contribute to current market conditions,” Snyder explained.
The Committee agreed to remove the specific reference to the AIR letter from the new charge, and it also agreed to go beyond the initial proposal to analyze the root causes of current market conditions. The Committee will first examine conditions in the medical malpractice insurance market and then will move on to the homeowners insurance market.