Property Casualty Assekuranz results may peak in the year 2006, but it does not, 2007 will be a return to reckless cutting subscription price and relaxed, after consulting sector experts to observe.
Instead, insurance companies should be able, on the dynamics of the year 2006 for another year of profitable 2007, maintained in the panel claims / accident Joint Industry Forum in New York recently.
At a meeting with the title of view from outside with a view of the direction, all agree that 2007 and 2008 are both for the Property Casualty Insurers, while they continue risks to price stability .
Dr. Robert Hartwig, president and chief economist at the Insurance Information Institute, noted that 2006 was a record year for P / C industry, with net profit after tax of nearly 60 billion dollars, according to the latest estimates. The sector has also provided its best Return on Equity for nearly 20 years - in the field of 14 percent.
“What drives the industry is very strong underwriting performance,” said Hartwig. “We wonder which have the potential to lower costs and damages rate to 60 years, maybe in 90 years , Low.
This was in part the big decline in insured disaster damage losses rose from $ 62 billion in 2005 to nearly $ 8 billion in 2006.
Regarding the future, Jay Gelb, Senior Vice President and Director non-life insurance business Equity Analyst, Lehman Brothers, said he expected the results of the industry to remain robust in layers in the years 2007 and 2008, although it is perhaps lower than in 2006. He estimated yield of 10 per cent to 13 per cent by 2007.
“Overall, the industry probably provides the culmination of the year 2006 and part of them, because we had very little loss of the disaster last year,” said the yellow. But he added that the strength of the industry would review these results in the future.
At the same time, yellow, bearing in mind the good Combined Ratios be achieved in both personal and commercial lines, competition is likely to heat up.
Personal Lines
Except for catastrophe losses, homeowners insurance line has been good for years, noted the expert’s personal lines Brian Sullivan, editor, Risk Information, Inc., added that auto insurance east as well.
It says that good results could be due to insurers’ remarkable commitment for a reasonable price. ” We have seen more discipline on prices, particularly in personal lines, in the last five years, when I saw in my career. I think it is because nobody knows what to do, “said Sullivan.
The absence of price can cut a rather unusual for those who have been in previous cycles. “Everyone wants it to grow profitable, but the question is how. I do not think anyone has been in a situation where we do not cut the prices to increase market share, “Sullivan said.” It would be nice if someone do something stupid, or is there a shock unexpected claims. ”
Matthew Mosher, Group Vice President of Global P / C-rating AM Best Co, noted that some softening of the market, especially by car, but he believed the industry was maintaining its pricing policy discipline.
“The year 2006 saw the industry, a level of profitability, he had not seen over a fairly long period, but we are still not see the height of cutting rates would propose that the pricing policy undisciplined, “says Mosher.
“It is also a much higher concentration in the industry risk than ever before, which will help minimise the effects of a softening rate,” he.
Mosher describes the market as the experience of “price billing, but no discount pricing policy” as perhaps been the case in recent years.
Mosher agreement with Sullivan, as personal lines, prices are falling they do on the basis of actual risk factors influenced by demographic and security progress. “There is more focus on risk assessment as never before,” he maintained.
Hartwig noted that the P / C industry expects growth in net written premiums of nearly 2 percent in 2007.
In this context, organic growth slowing, it is possible that insurers mergers and acquisitions activity could take, as the yellow.
Hartwig proposed a possible evolution could East Coast regional insurer in the Midwest. But Sullivan questioned if it really happens. “You do not see the cut, the price would be more competition,” said he. “There is much talk about it, but I’m not sure it happens.”
The trends
As for lines of communications, yellow, said risk management can expect a continued stable market, with prices relatively flat and restrictive conditions. An exception would wind for all at risk.
In the arena of civil liability, Hartwig described the wrongful act of ‘remarkable better “In essence, thanks to efforts by some States. Yellow said he thinks that the image is a responsibility to continue to improve, while Mosher said he is concerned that the Democrats control of Congress, the slow progress in this area.
View of Mississippi
George Dale, insurance commissioner of Mississippi, warned that despite the industry collective record results in 2006, each sector has its own by the State. “We do not want to pay Mississippi for wildfires in southern California and they want to be paid, as hurricanes take Bay St. Louis, Mississippi.”
Quote of the roundtable discussed the wind / water issues of disputes in relation to Hurricane Katrina, to agree a resolution on these issues would benefit the industry in the long term.
Dale noted that during negotiations are underway with several parties within the framework of a large number of threats of use, because an agreement has not yet been achieved. “My concern is to be sure that the rights of policyholders and housing are protected and that they receive not only a coupon and the lawyers of all courses with money.
