Supply Chain Challenges Distort U.S. Insurance Underwriting Metrics

The U.S. insurance market faces unprecedented challenges due to ongoing supply chain disruptions that impact underwriting metrics and project timelines, particularly in the construction sector. Brent Aycock, managing director at Higginbotham, indicates that the current climate is more difficult than past economic downturns, with escalating premiums resulting from audit complications and delayed sales. In 2023, life insurance premiums reached $193.59 billion, but non-life insurance premiums are increasing even more quickly, driven by inflation and rising claim costs.

Supply chain issues, such as shortages of crucial materials—like windows, doors, and electrical panels—have severely affected construction companies, which are facing significant operational strains as they struggle to meet project deadlines. These delays have ripple effects that alter core underwriting metrics, resulting in fluctuating sales projections and rising off-cycle premiums. Fleet availability has also become a concern, with sourcing work vehicles leading to operational disruptions in mobile-reliant industries.

The current environment has also seen an uptick in safety incidents, as pressures mount to deliver on time despite material shortages, leading to dangerous work conditions. Underwriters are compelled to justify increased rates to financially burdened clients, navigating the challenging math of contracts that require high levels of insurance coverage. With no immediate solutions in sight and global dependencies further exacerbating local vulnerabilities, industry leaders like Aycock highlight the necessity for resilience and adaptability in these turbulent times, signaling a long road ahead for recovery and stability in the U.S. insurance landscape.