The current insurance pricing environment is likely to continue as insurers grapple with rising loss costs due to inflation, higher court rulings and climate-driven claims, Chubb Ltd. Chairman and CEO Evan Greenberg said Tuesday.
While inflation may slow for some property exposures, casualty rates will have to continue to rise as litigation increases, he said during his keynote presentation at Riskworld, the Risk & Insurance Management Society Inc.’s annual conference in Atlanta.
At the same time, the use of artificial intelligence will expand in the insurance sector, Greenberg said.
“We’re in the middle of a tough market with turbocharged property reinsurance,”; he said.
Rising reinsurance prices and reduced capacity are forcing insurers to retain more exposure and volatility, Greenberg said.
“At my company, we are fully prepared to take more risk thoughtfully and within reasonable limits, as long as we can earn a reasonable risk-adjusted return,” he said.
But public policy in the U.S., where some regulators in disaster-prone states are cracking down on insurance rate hikes, could create tensions, Greenberg said.
“If states deny insurers the ability to price adequately or tailor coverage appropriately or deny them the flexibility to manage their risk concentration, insurers will simply close exposure, threatening the availability of insurance in the private sector,” he said.
Loss cost inflation is likely to improve for property risks this year as inflation declines, but debt lines will continue to face higher losses as liability awards and settlements expand and rise, Mr. Greenberg.
“The casualty rate in most classes will need to rise at a faster 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 will begin expanding its use across lines and geographies, Mr. Greenberg.
The technology adds insights and removes the need for “waste,” he said.
“It makes people’s jobs more meaningful, more fulfilling. Yes, we will require less labor in the end, but it will be higher skilled labor, better compensated labor,” Mr. Greenberg said.