Casualty insurance plays a crucial role in safeguarding individuals and businesses from financial losses resulting from unexpected events, such as accidents, liability claims and unforeseen damages. Gallagher takes a holistic approach to mitigate our clients' casualty risk. By forming strong partnerships with our clients, using gap analysis and looking at your overall business, we provide customized, comprehensive and cost-efficient risk management solutions.
In 2024, our team of Casualty insurance professionals continues to see stable increases in the market influenced by regulatory changes, changes in the workplace, social inflation and technological advancements. The team is closely monitoring the market for indications of higher exposures that may mean renewal premium changes.
Here are five key trends the Gallagher Casualty retail brokerage team is watching.
1. Balancing the opportunities and risks of AI
Artificial intelligence (AI) has unlimited potential to increase efficiency, automate complex operations and enhance predictive data analysis. The insurance industry in general continues to advance the use of AI-driven data to make informed decisions in underwriting, claims, core processes and elsewhere. A common challenge is deciphering the quality of that data from the source, reducing or removing data bias and turning the opportunity for error into accuracy when forecasting the future.
As more organizations embrace the potential of AI to reduce risk, they require an equally robust risk-mitigation plan, which can be developed with their insurance broker's guidance. For example, some predict the use of AI may lead to job elimination, especially for repetitive and routine tasks, potentially displacing the existing workforce. AI algorithms may also inadvertently incorporate biases from the data they're trained on, potentially resulting in unjust decisions or reinforcing biases against protected user groups.
Read more about the potential risks of AI risk and insurability.
2. Keeping up with auto liability costs
From accidents causing bodily injury or property damage to legal liabilities arising from collisions, organizations are facing increased financial exposure as we see higher auto claims in both frequency and severity. Key factors impacting this challenging market include general inflation and increased repair costs, increased dangerous driving behaviors, enhanced technology powering vehicles and even severe weather.
Mitigating auto liability risks requires a comprehensive understanding of evolving driving trends, regulatory frameworks, and the integration of advanced safety measures. Insurers must adopt strategies to navigate the dynamic landscape of auto liability risks and ensure adequate insurance protection and risk mitigation solutions. Claims advocacy is more important than ever to navigate severity claims, especially those that will require loss payments from multiple carriers.
3. Managing soaring social inflation
Social inflation describes the rising costs of insurance claims triggered by increased litigation, higher jury verdicts (also called nuclear verdicts) and shifts in social attitudes. Increases in legal expenses, higher settlement amounts and a litigious environment contribute to inflated claim payouts. Insurers must adapt underwriting and risk assessment strategies to account for this trend.
Effective communication and collaboration between insurers, legal experts and policymakers become crucial to navigate the complexities of social inflation and ensure the sustainability of casualty insurance in the face of evolving societal dynamics and legal landscapes. For businesses, working with knowledgeable team of experts to conduct a risk assessment to understand potential gaps in coverage or risk control tactics is crucial.
4. Navigating biometric privacy compliance and liability
Organizations collect biometric data — including fingerprints and face scans — to identify employees and consumers because biometrics are quick, convenient and unique to the individual. Although the Biometric Information Privacy Act (BIPA) was enacted 16 years ago, it's gaining more attention due to the number of class actions in recent years, along with a rise in significant settlements.
Inevitably, the rise in BIPA-related lawsuits has resulted in the introduction of liability policy exclusions as carriers seek to protect their balance sheets. Businesses from all industry sectors are urged to maintain data security safeguards to protect biometric data from improper access, disclosure or acquisition.
5. Understanding PFAS exposures
Perfluoroalkyl and polyfluoroalkyl substances (PFAS) are toxic pollutants linked to myriad health issues. Also called "forever chemicals," they were once used in a wide variety of manufacturing processes. In 2023, the US Environmental Protection Agency (EPA) proposed federal limits on PFAS in drinking water that may bring further liability and regulatory risks for utilities and municipalities.
Carriers are closely monitoring claims relating to PFAS chemicals, and affected municipalities may need to establish new processes to document and notify of the existence of PFAS in drinking water and identify the appropriate measures to treat the water, which may include treatment using current or emerging technology.
Renewals with confidence: Actionable insights from Gallagher's Casualty team
We have teams of casualty specialists throughout the country that are ready to find the appropriate solution for your business needs. They recommend taking action early for a more successful renewal:
- Identify and prioritize the key objectives of your renewal strategy; prepare and plan in advance.
- Engage key stakeholders in planning and strategy discussions. Communicate early and often.
- Promote differentiation of risk with quality submission data backed up by context around risk-control strategies and claims management to mitigate exposure underwriters are most concerned about and uncertainty.
- Engage your broker's analytics team to model and evaluate if alternative structures and options are appropriate.
- If appropriate, meet with your carrier partners in advance of your renewal, potentially off-cycle to build rapport and personal relationships.
Gallagher can provide guidance — and coverage — for large-loss-sensitive Casualty, including General Liability., Product Liability, Business Auto Liability and Workers' Compensation. In addition, we have expertise in non-traditional alternative risk programs, Excess Casualty program design and placement, and gap analysis and form review. Learn more about our Casualty insurance offerings and services.
