Examining the Potential Risks in Lending to Insurance Agencies and Brokers

The insurance market is in turmoil as inflation, climate risk, and rising reinsurance costs drive up prices across the board. This not only impacts individuals and businesses facing higher insurance rates but also the banks that lend to them. Banks are further exposed when they provide loans to the agents and brokers who sell insurance policies.

Property and casualty (P/C) insurance, a major industry segment, has been particularly hard-hit. As natural disasters become more frequent an…