David Sampson, president and CEO of the American Property Casualty Insurance Association (APCIA), has issued a warning over the challenges facing the US insurance industry in the opening address of the association’s annual meeting in Denver, Colorado.

David Sampson – APCIA

In his address, Sampson noted that the insurance industry has been “put to an extreme test” in 2020 and 2021 by the pandemic and natural catastrophes. He said he is proud of the industry’s performance and the advocacy it has done.

The executive noted the annual meeting’s theme of “Insuring What Matters Most”.

Sampson added that there should be no wavering from the industry not paying business interruption claims related to the pandemic where they are not covered under policies.

Looking ahead, Sampson commented that “it seems like we are at yet another convergence of disruption as 2021 draws to a close and the new year lurks just around the corner”.

He continued: “Macroeconomic, societal, technological disruption all exacerbated by the pandemic have intersected to present continued challenges for property casualty insurers.

“Elected officials will continue to face key inflection points along the way on how to govern through this period of unprecedented change. If past is prologue, that most likely means we are in for trouble.”

Sampson referenced a Winston Churchill quote that Americans will always do the right thing but only after they have tried everything else, with the APCIA president and CEO warning against dramatic miscalculations of public policy.

“That is why an insurance industry that is united is so important today as we apply advanced resources and strategies to address these public policy issues surrounding continued threats to  the sanctity of insurance contracts to expand policy coverage, continued attacks on risk based pricing and insurance underwriting tools that serve as the foundation of this industry, and continued lawsuit abuse - especially in states like Florida where the dire insurance property market is facing disruption - and an upcoming election year that mirrors the very tumultuous days of 2006 and 2007,” Sampson said.

He added that these challenges are amplified by trends that are “sending shockwaves through the marketplace” such as increased loss frequency and severity, particularly in auto insurance lines, and an increasing impact from climate risk, which is leading to catastrophic losses from hurricanes, wildfires and floods.

On top of this, inflationary pressure has increased, which has resulted in higher prices for consumer goods and survives and increasing claims costs.

“Home insurers are being impacted by the rise in construction material costs while auto insurers are seeing higher auto parts costs,” Sampson said.