October 2022
To: ALL INTERESTED PHYSICIANS
Aside from all else, inflation and the falling worldwide stock markets will cause strains upon the insurance market which will affect us all, both personally and professionally.
Insurance premiums do not exist in a vacuum and are subject to the economic demands of the secondary (reinsurance) marketplace. The risks undertaken by the carriers listed on your policy are frequently shared with the players of the secondary market. Portions of the risk are, in essence, reinsured by others and the premiums shared as a cost of business of your primary carrier. The economic health of all the carriers is also dependent upon the rate of return they can receive upon their investments. A falling stock market thus affects their portfolios to the same extent that your individual portfolio gains- or suffers.
The secondary markets are not limited to the insurance risks of any one locality or country but are involved on a worldwide basis. Thus, a tsunami in the Philippines may cause an increase in your premium for your summer home in the Hamptons. Hurricanes in Florida giving birth to new roofs cause ripples in New York.
Not only are our personal premiums- homeowners’- auto- jewelry floaters subject to the worldwide issues, so, too, are our professional liability policies- all are dependent upon the ability to reinsure and all are dependent upon the financial health of the secondary marketplace.
If you have a winter home in Florida, you are aware that many insurers have left the state and the primary reason, if you speak with insurance representatives, is the absence of the ability to reinsure.
Be wary of politicians who claim that if elected they will control premiums. As we noted at the outset these premiums are not set in a vacuum. Tom Friedman has frequently observed that the world is now flat in terms of commerce and that is certainly true in the invisible world of insurance.
Respectfully Submitted,
Schaum Law Offices