Chubb raises loss cost trends ‘instead of being left behind and getting caught’: Greenberg


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Chubb CEO Evan Greenberg said the insurer is seeing favorable returns, but an additional rate is needed to “keep up with the cost of loss, which is hardly benign.”

During its July 27 call to discuss second-quarter earnings, Greenberg said Chubb has increased the inflation factors it uses in loss ratios to establish rates that can keep pace.

Chubb Q2 Net Income Drops $1 Billion; Book record insurance results

The move is one of anticipation, Greenberg explained. Chubb doesn’t see the trends it’s using right now, but has increased its loss expense trends “in anticipation of the future as the insurance business is classically lagging.”

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“Instead of being left behind and getting caught, we’ve all been through this a number of times in periods of inflation. So it’s to anticipate ahead,” Greenberg told analysts.

Evan Greenberg

He said no factor, such as medical inflation or social inflation, is of particular concern to him.

“There are no areas that worry me. I don’t think so. We’re just vigilant about everything,” Greenberg said.

He said the overall pricing environment has become more competitive, especially for some accident classes, but for the most part, the market is maintaining discipline. Greenberg said that “companies want to grow in an environment that is adequately judged,” but most are “rational” with pricing.

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“I expect this to continue, not only given the specter of loss-cost inflation, but also the presence of other risk exposures such as climate change, the war in Ukraine, the process environment, cyber and the total cost of reinsurance – many reminders to get paid for the insured exposure,” Greenberg said.

At Chubb, total rates on commercial lines in North America increased 7% in the second quarter, while total prices were up 10.5%. Rates for large accounts were up 8%, while prices were up 11.6%. Mid-market business rates were up nearly 7% and real estate was up 5%. In the homeowners’ sector, prices were up about 10% and the loss-cost trend is also at about 10%, Greenberg reported.

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Trends Loss of profit Chubb

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