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POVERTY AND OPIOIDS UNEXPECTEDLY TIED TO RISE IN PERSONAL UMBRELLA CLAIM SEVERITY: GEN RE

Insurers saw more costly personal umbrella claims before the beginning of 2020, consistent with a Gen Re analysis, and therefore the reinsurer expects such claims to continue as we emerge from the COVID-19 pandemic.

Personal umbrella insurance covers liability costs beyond the bounds of the policyholders’ homeowners or auto policies.

Gen Re has uncovered a number of the highest drivers for the massive claims, and that they need to do with a number of society’s harshest ills. Top reasons cited were increases in:

the annual poverty rate;
opioid prescription rates;
fatal accidents;
brain injuries;
attorney representation; and
injuries involving a fatality and multiple claimants.
Other notable predictors linked with higher claims severity include laws permitting recreational marijuana and a scarcity of motorbike helmet laws.

Gen Re said poverty, opioid use, and marijuana laws were unexpected predictors of umbrella claim severity which all of the analysis’ findings “will facilitate deeper client interaction on this line of business.”

“Social inflation” – a term wont to describe growth in liability risks and costs associated with litigation trends – has been a growing concern for insurers. The phenomenon has mostly affected the commercial auto and general liability lines, but the findings here – particularly the rise in attorney representation – suggest that it’d be making inroads into personal lines.

Updated: June 21, 2021 — 1:38 am

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