December 20, 2004 by Canadian Underwriter
The U.S. homeowners’ insurance market has turned the corner after two decades of poor results, according to a new report by Conning Research.
Conning says homeowners carriers have hit “the sweet spot” and “reversed the curse”, a trend likely to carry through 2008. “The outlook is bright for 2005-2007, due to a favorable underwriting environment and a surge in insurer sophistication,” the report notes.
Between 1980 and 2002, the sector lost money almost every year, comments Bruce Hale, an analyst for Conning Research. He adds that every time the sector seem to come to grips with one issue, a new threat emerged. “Insurers brought many of these problems upon themselves. While some remedial actions began in the mid-1990s, the rewards only became noticeable in the profitable 2003 results.”
However, beyond 2008, Conning is not optimistic the joyride will continue. “While the homeowners recovery is impressive, it appears that, overall, the line will revert to traditional market cycle dynamics,” says Stephan Christiansen, research director at Conning.