In its annual market report, Moody’s Investors Service is predicting stability in the U.S. personal lines p&c insurance market. The relatively strong risk capitalization level, the impact of premium increases and stricter underwriting are all having an effect on 2002 yearend combined ratios, Moody’s says. There is a sense that insurers have successfully adopted the strategy of underwriting for profit rather than marketshare. Competition in personal lines has diminished in the last two years, although there remains some competitive and regulatory pressure on the sector. “These changes largely follow the disappearance of several favorable market conditions since the late 1990’s including redundant reserve positions, benign automobile loss cost trends, and high investment yields [which have] decisively altered the industry’s position,” says Marc Serafin, an analyst with Moody’s. Information and technology also have key roles to play in the industry’s turnaround, says Ted Collins, managing director for p&c and reinsurance at Moody’s. “U.S. p&c insurers have enhanced their technological skills and data analysis capabilities to assist them in their return to profitability.” Better, faster information will put insurers in a better position to react to deteriorating pricing that could impede pricing, says Moody’s.