2006 a “banner year” for U.S. P&C industry: RIMS
November 6, 2006 by Canadian Underwriter
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Echoing a similar trend in Canada, commercial insurance premiums in the United States are declining in 2006 Q3, continuing a phenomenon over the past two quarters, according the quarterly RIMS Benchmark Survey, prepared by the industry analyst Advisen.
In the United States, property insurance was the only line of business that increased in the third quarter, by 1.7%, the study notes.
The RIMS Benchmark Survey concludes this modest rise in average property insurance premiums masks sharp increases that continue to affect businesses with properties in regions exposed to hurricanes and earthquakes. Property owners in regions not prone to natural catastrophes continue to enjoy falling premiums, the study observes.
“The situation remains grim for property insurance buyers in Florida and along the Gulf Coast, and earthquake coverage is skyrocketing in California,” says Joseph Restoule, a member of the RIMS board of directors. “It doesn’t appear as if property insurance premiums in these areas will improve any time soon.
“But the upside is that risk managers are getting relief in other lines of insurance.”
In the first half of 2006, the U.S. property and casualty industry reported an underwriting profit of US$15.1 billion a 31.8% increase over the same period in 2005. In the absence of any late-season catastrophes, the U.S. P&C industry may report record profits for the full 2006 calendar
year, the RIMS study notes.
Policyholders’ surplus, the measure of insurance industry capacity, grew 2.7%. Advisen believes this additional capacity may fuel competition within the industry that would encourage insurers to decrease premiums.
“Unless you own property on the coast or along a fault line, it’s increasingly a buyer’s market, and market conditions should continue to improve for risk managers,” said Advisen editor-in-chief David Bradford.
“It looks likely that 2006 will be a banner year for the property and
casualty insurance industry. A profitable year will encourage insurers to
further cut prices.”
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