Best’s Commentary: Expansion of Child Victim Compensation Laws could Have Negative Affect on Insurers
The expansion of child victim compensation laws across
A new Best’s Commentary, titled, “Expanding Child Victim Compensation Laws Could Adversely Affect Insurers,” cites a possible increase in claims and litigation that could significantly affect insurers that specialize in providing coverage to academic, religious, daycare, and municipal entities, as well as other childcare employers. This scenario may be elevated in
In addition to
“Both areas have very long latency periods, extending years if not decades, significantly increasing the risk of litigation,” Riggs said. “The settlement amounts awarded are unpredictable, leading to uncertainty and challenges in establishing reserves.”
Insurers will have to deal with marked increases in frequency of claims, which may lead to significant increases in defense cost containment expenses. Many insurers will face operational challenges with locating exposures that extend beyond 20 years as the technology and data storage procedures were very different.
The report also notes that these types of laws could affect negatively the ratings or rating outlooks of insurers with past and present exposure to these types of risks in states that have approved laws extending statutes of limitations. To the extent that AM Best perceives the impacts to be outside of risk tolerances, “it could be a factor in our rating considerations,” the report states.
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=287920.
AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Source: AM Best
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