David A. Sampson, President and CEO of the American Property Casualty Insurance Association (APCIA), has responded to a recent Wall Street Journal article titled “Runaway Insurance Costs Bring Back Talk of Price Caps.” In his letter to the editor, Sampson criticized the article for not addressing the underlying causes of rising insurance rates.
According to Sampson, inflation at a 40-year high is one major factor driving up insurance costs. He explained that as the prices of goods and services increase across the economy, insurance premiums must also rise to ensure policyholders are adequately protected against potential losses. For example, with the average cost of a new car now exceeding $50,000, older auto insurance rates are insufficient to cover repairs or replacements.
Sampson also highlighted that more than half of new homes are being built in areas at high risk for wildfires. This increased exposure raises risks for insurers and necessitates higher rates to maintain coverage for property owners.
He further pointed to legal pressures from trial lawyers as another contributing factor. Sampson stated: “Insurers, along with many other industries that produce products of real value to everyday Americans, are under increasing assault from trial lawyers seeking to enrich themselves by turning our legal system into a betting market. These billboard attorneys take billions from undisclosed investors who pump the already overheated tort ‘markets’ with even more profit chasing. The average family pays a ‘tort tax’ of more than $5,000 a year as a result. Victims deserve justice and compensation, not exploitation. We need transparency into who is funding these lawsuits, reasonable limits on awards, and caps on attorney contingency fees, not artificial price controls. Florida took these special interests on a few years ago and insurance rates are stabilizing and coming down in many cases even decreasing.”
Sampson argued that government-imposed price controls would distort markets and create negative incentives: “Government price controls distort markets and create perverse incentives. Imagine the government telling automakers or builders how much to charge for the cars and homes they make. It’s not a serious solution.”
The APCIA represents home, auto, and business insurers nationwide and advocates for private competition in the insurance industry.
