Issues & Answers Special Advertising Section
Vice President of Underwriting for the Human Services division
Philadelphia Insurance Cos.
“Work with a carrier who’s got knowledge, understanding, and the ability to act quickly.”
How are social issues impacting the human services sector?
One of the main issues we see in the human services division is what we’re calling social inflation. Social inflation is the increased cost to handle claims, as well as the added piece that affects the outcome of large claim settlements. This social inflation is creating a lot of turmoil to the underwriting such that the cost of these social inflation claims plus the percentage of the general inflation is somewhere in the range of 4% to 6%. In addition to the general liability social inflation issues, we’re also under extensive pressure from auto liability as well as abuse and molestation claims. All this leads to higher loss ratios in the market.
What else is leading to higher loss ratios in the market?
Some companies are taking a wait-and-see approach while others are being proactive in how they handle abuse. For PHLY, our big message is one of education. We need to educate both our agents and our insureds what exactly is happening with the claims, how the claims are being handled, how the settlements are being handled, and how that’s affecting the loss ratios. Even if we are we going to write these accounts in the future.
Is the opioid crisis taking a toll on organizations?
The opioid crisis has a multitude of effects. Opioid claims are becoming extremely expensive. Beyond death and suicide as a result of opioids, we are seeing claims such as ‘not-in-my-backyard’ claims. There might be a substance abuse facility that’s added to a residential facility. People don’t like that, so there are claims for that. There are medical malpractice claims for organizations that had intake procedures that go awry. There are a multitude of things to think about that the opioid epidemic is giving the human services insurance industry.