American families are paying around $3,600 annually in the form of "tort tax," according to a University of South Carolina professor.
The professor, Robert Hartwig, shared these findings during the Target Markets' 24th Annual Summit.
Speaking on the property and casualty insurance outlook, the expert projected further industry growth until 2025, despite some possible challenges by economic slowdowns and international trade disruptions.
According to him, the absence of recession has contributed to expanding premium opportunities across various sectors such as construction, energy, healthcare, and technology.
Addressing emerging risks, Hartwig highlighted cybersecurity as a critical concern, noting its evolution from a new to an established threat with underestimated future impacts.
Meanwhile, inflation appears to be moderating, as he predicted levels would likely settle above the Federal Reserve's 2% target, closer to 2.5%, affecting claims inflation.
The professor further remarked that political solutions and increased public awareness are necessary in addressing legal system abuse.
"We believe that people should get justice, but that it should end there because otherwise it's costing everybody a lot more and it's dragging down our standard of living as Americans," Hartwig said.
Hartwig also covered regulatory challenges, saying that there are misconceptions about the reasons for increasing insurance costs, especially in personal lines. He attributed the increase in prices to several factors, including inflation, high catastrophe losses, and legal system abuse, rather than industry practices.
Technological advancement in the insurance space was also tackled, with Hartwig explaining that innovations such as AI and machine learning are aimed at replacing human inadequacies, not their talents.
"[AI] technology is not here to replace everyone that we're seeing in this room today. It's to help them do their jobs better," Hartwig concluded.
How does a ‘tort tax’ affect American families? Share us your thoughts below.
