I.I.I. Examines Biggest Risks in 2006

Claims News Service, Feb.7, 9:49 a.m. EST — What are the biggest potential risks for 2006? According to the Insurance Information Institute, which recently issued its annual Groundhog Day forecast, high on the list are exposure to catastrophic loss, which has superseded loss of pricing and underwriting discipline as the chief concern. Insurers also run the risk of overestimating the impact of 2005′s record catastrophe losses on the price and availability of coverage in 2006.

According to the report, among major external risks, tort costs remain among the factors that most significantly affect insurer financial performance, despite the passage of the Class Action Fairness Act of 2005 and traction on medical malpractice reform. Asbestos remains perhaps the largest single legislative disappointment for insurers, who generally oppose the government’s current trust fund proposal. Asbestos also continues to weigh down the industry’s financials, with various insurers taking charges to bolster reserves.