Recession whittles away at U.S. commercial lines revenue

The lingering effects of the recession continue to whittle away at U.S. commercial lines revenue, according to an Advisen Report.
FM Global sponsored the report, entitled The Insurance Market in 2010: The Lingering Impact of the Recession on Capacity and Pricing.
“The commercial lines insurance market has been pummelled by the combined impact of depressed rates and declining written premiums resulting from the global recession,” according to the executive summary.
Despite this, insurers will still post a profit for 2009 and capacity remains abundant, the report finds. But revenues have fallen and there is “little hope of a material rebound” this year.
Average commercial lines premium fell roughly 2%. Advisen expects to see a similar decrease in 2010.
Although U.S. property and casualty insurers emerged from the financial crisis largely unscathed (with several exceptions), they did not come away untouched by the recession, Advisen says.
Plummeting stock markets, the outcome of a global credit crisis – combined with deeply eroded rate levels and $26 billion in insured catastrophe losses – wiped out tens of billions of dollars in policyholders’ surplus, the report said. This led to a 96% plunge in profitability in 2008.
A stock market resurgence, as well as a year of few natural catastrophes, helped to replenish surplus and re-inflate profits in 2009, Advisen said.