No Falling Sky

“The economic sky is not falling.”

That’s the opinion, at least, of Robert P. Hartwig, Ph.D., president and economist at the Insurance Information Institute.

Hartwig told attendees at an insurance symposium recently held in Austin by the Insurance Council of Texas that while the economy may not be rebounding as fast as everyone would like it to, the doom and gloom being offered up by pundits and various media outlets is unfounded.

Some 70 percent of the U.S. economy is based on consumer spending, and consumers are spending, Hartwig said. Car sales are increasing and housing construction is up for the first time in four years, he said.

Construction remains a problem, he noted, but even though there are fewer people employed in construction than there were two-and-a-half years ago, private sector construction appears to be expanding, mostly in the commercial area.

Public sector construction is at a standstill, but private sector construction is up in areas such as power, manufacturing, hotels and transportation, Hartwig said.

The country has experienced 30 months of private sector job growth, and more people are employed today than when President Obama took office. The job losses, he said, are coming from the public sector, with hundreds of thousands of government jobs being shed primarily in local and state governments.

As for the property/casualty insurance industry, premium written is the strongest it has been since 2004-2005, Hartwig said. And, for the record, there is no traditional hard market now and none foreseen in the immediate future.

P/C exposures are growing modestly and payroll exposures are now higher than before the downturn.

The P/C industry in 2012 is on track for the strongest year since 2007, Hartwig said, adding that catastrophe losses so far this year are nowhere near the levels that occurred in 2011. Last year was one of the most expensive catastrophe years ever for the United States, he said.

While reinsurance prices have been trending upward somewhat globally, it is generally affordable and available everywhere, Hartwig said.

Overall, the insurance industry is strong from a capital perspective, with capacity being at an all-time high.

So, while everything may not be coming up roses, now’s not the time to be fretting over lowering clouds.

Because no matter what some people say, the sky, apparently, is not falling.

Topics Market Property Casualty Construction