In its recent publication, Risk & Insurance identified the leading causes of higher insurance premiums. Here is a quick summary.


1. There has been an explosion in liability claim severity and the associated legal expenses (both have been growing at about the same rate).
With the rapid growth of TPLFs (third-party litigation funders) and their increased involvement in litigation, cases often take a year longer to resolve than they would if a TPLF was not involved in the case. TPLFs provide upfront financing for often expensive and drawn-out litigation in return for a percentage of the proceeds from the case if it’s successful. The TPLF sector has blossomed into a massive industry in recent years, and major players now invest billions of dollars annually in litigation.


2. Today’s inflation rate is as high as it has been in 40 years. In addition to normal consumer price index (CPI) inflation, auto manufacturers and body shops continue to face supply chain shortages that impede their ability to obtain parts and repair vehicles.


3. A shortage of drivers, and employers struggle to recruit new drivers to the profession. This shortage has increased driver turnover and put further pressure on delivery schedules. Inexperienced and significantly older drivers account for a large part of the workforce, and historical experience shows these drivers tend to have a higher frequency of accidents.



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