Nuclear verdicts, nefarious storm chasers and another workers' comp win

With southern communities picking up the pieces in the wake of Hurricane Francine, early estimates for insurance losses range between $1 billion and $3 billion, with primary insurers in Louisiana expected to bear most of the impact. Despite this being the Pelican State's seventh hurricane landfall since 2017, analysts predict that the losses will be manageable for property and casualty insurers, with minimal impact on the reinsurance market. While the storm’s wind damage was mostly limited due to the sparsely populated coastal region, flood risks, particularly in New Orleans, could add to the total loss. Overall, Francine is not anticipated to pose any significant problems for the insurance industry.

So now is as good a time as any to take stock in the troubling trend that volatile weather like this continues to pose, particularly during hurricane season. Fast-growing coastal cities, such as Houston and Tampa, have an increasing number of people living in flood-prone areas. Specifically, socially vulnerable communities, home to elderly and disabled folks, are less equipped to navigate storms. "Coastal communities can’t afford to wait for a disaster’s wake-up call to invest in protecting themselves," The University of Alabama professor Wanyun “Abby” Shao wrote in a piece fo The Conversation U.S. . "To prepare for future disasters, I believe they need to rethink urban development with climate change in mind."

It's not just nature taking a toll — fraudulent contractors, known as "storm chasers," are out there exploiting homeowners, filing inflated claims and driving up premiums. In fact, this malpractice costs insurers billions annually, with the FBI estimating at least $1 billion in fraudulent roof claims each year. Insurers are responding with stricter measures, legislative backing, and tech innovations, but policyholders also need to stay vigilant.

Cyber crime is another trend that won't be going away any time soon. And it’s not just hackers leveling up — insurers and asset managers are going all-in on cybersecurity. According to Moody's, cybersecurity investments jumped 53% from 2019 to 2023. And now, 8% of IT budgets are dedicated to battling cyber threats (up from 5% in 2019). With the Americas accounting for a majority of cyberattacks, companies in the region boosted their cybersecurity spending by 65%. Meanwhile, nearly all respondents have multiyear cyber risk strategies, from risk assessments to rapid incident responses.

Let's not forget about the proliferation of nuclear verdicts, which have gone, well, nuclear in the U.S., smashing records with an explosive 27 court cases awarding more than $100 million last year, according to Swiss Re. Overall, social inflation jumped to 7% in 2023 – a 20-year high – due to litigation costs from mega-jury awards.

Despite all the challenges, insurance is still among the very best industries for those looking for a salary bump. Corporate America, in general, is heading into 2025 with salary budget increases projected at a near two-decade high, according to The Conference Board. Insurance, along with energy, agriculture and communications, lead the charge, planning some of the highest pay bumps to stay competitive in a tightening labor market.

Finally, winner and still champion since 2015... workers' comp! Yes, AM Best reports reports the segment continues to outperform all other lines of business in the U.S. property and casualty sector, driven by declining loss frequency and favorable reserve development. WC has been the most profitable line since for nearly a decade, with an 88.7% combined ratio in 2023, reflecting resilience even through the pandemic. Strong safety initiatives, reduced fraud, and lower defense costs have contributed to its success, and wage increases and job growth have kept premiums above pre-pandemic levels. The WC market remains competitive, with the top 25 insurers accounting for 67% of business.