The following quotes were taken from an article published by Advisen on October 6, 2020.

Rates began adjusting upward at a quicker pace in September. We expect the fourth quarter 2020 will reflect continued aggressive rate increases in property, D&O and umbrella/excess liability coverages, said Richard Kerr, CEO and founder of MarketScout.

MarketScout found catastrophe-exposed properties seeing the largest price increases, with many admitted insurers backing away from risk-prone areas. Kerr said, Homeowners in California and coastal areas of Florida are suffering massive rate increases. If an insured owns a home in high risk wildfire or hurricane areas and has suffered prior losses, rate increases can be as high as 40 percent.

If the insurance pricing model we covered in class is accurate, how would the presence of large claims this year (especially wildfires and hurricanes) justify an increase in prices next year?