Anti-concurrent causation clauses specify that a loss is not covered when it was the result of more than one peril and at least one of the perils is subject to a policy exclusion. Such clauses were widely adopted by insurers following adverse court decisions that resulted in insurers providing coverage that was never intended to be provided by the relevant policy language.
The use of such provisions has come under legislative and regulatory scrutiny, particularly in claims disputes after some extreme weather events. These disputes often draw outsized attention from media and elected officials, even as the overwhelming majority of claims are paid without issue.
Best Practices for Regulating Property Insurance Premiums and Managing Natural Catastrophe Risk in the United States (PDF)
As a response to the Federal Insurance Office’s 2013 report that called on state-level policymakers to identify and implement best practices with respect to insurance rate regulation and natural disaster mitigation, Patricia Born, Ph.D., Florida State University, and Robert Klein, Ph.D., Georgia State University, examine the features of state regulatory environments that serve either to mitigate or exacerbate the adverse effects of natural catastrophes on property insurance markets. The paper addresses four areas of regulation: regulation of rates and underwriting practices; administration of residual market mechanisms; regulation of insurance policy provisions; and regulation of claim settlement practices.
Anti-concurrent clauses have been validated and enforced by most courts as an appropriate way for insurers to ensure that policies provide coverage for only those losses they are meant to cover. For insurers, they provide a means of enhancing predictability and managing exposure, allowing for greater financial stability and solvency.