Liability Claims, Demand Set to Increase: Swiss Re | Canadian Insurance

Liability Claims, Demand Set to Increase: Swiss Re

Claims growth expected to outpace GDP growth again after several-year lull

A new report from Swiss Re predicts that the lull in liability claims will soon end, depleting claims reserves and pushing up demand.

The report, “Liability claims trends: emerging risks and rebounding economic drivers” says that claims will likely grow in the near future as companies launch themselves into such risky fields as fracking and driverless cars.

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It adds that tort reform, “which had dampened claims severity in some markets,” will not keep growth low for very long.

Claims growth has historically outpaced GDP growth, but Swiss Re notes that the gap has narrowed considerably since 2008. As economic activity picks up, it expects that claims and demand will follow.

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It also says that this spike in claims and demand will translate into price increases, but that some books of business may suffer in the meantime.

As in most other areas, Swiss Re recommends that insurers take advantage of “Big Data” and predictive modelling to mitigate the effects of a rise in liability claims.

Some insurers are already there: in a Towers Watson survey last year, one-third of respondents said they use predictive modelling—a seven-point increase over 2012.

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