Property/casualty insurance executives believe that the U.S. economy is still not on the right track. According to a survey conducted by the Insurance Information Institute, 77 percent of P/C leaders hold this view.
The I.I.I. conducted a survey at its annual Property/Casualty Insurance Joint Industry Forum on Jan. 15. Participants included close to 250 executives from P/C insurance and reinsurance companies and organizations.
The survey revealed that executives are in agreement on most issues, including how the industry will fare in 2013. Despite not liking where the economy is headed, they see some good signs for the industry.
In terms of lines of insurance, 59 percent expect an improvement in both personal auto and homeowners. While 68 percent expect an improvement in commercial lines, 61 percent see no improvement in workers compensation.
Seventy-four percent believe that premium growth will be higher in 2013. In terms of capacity, 71 percent expect policyholders’ surplus to increase.
Sixty-two percent believe the combined ratio will be lower in 2013 than it was in 2012.
On the investment side, 64 percent of industry leaders expect an “up” year in the equity markets in 2013 The I.I.I. noted that equities constitute only about 15 to 20 percent of the industry’s invested assets.
The industry leaders were also asked whether they expect interest rates to rise. Sixty-two percent think they will remain flat; none expects them to fall.
Comments at an afternoon panel confirmed that much of what happens in insurance will depend on growth in the economy, including whether Americans build and buy more new cars and homes in the new year.
Like many other Americans, the insurance executives are not keen on today’s political atmosphere. A whopping 95 percent agreed that Washington will have a negative impact on the economy.
Dr. Steven Weisbart, the I.I.I.’s chief economist, identified some positive trends heading into 2013. “As the economy continues its recovery, exposures will continue to grow, implying further increases in insurance premium volume,” Weisbart said.
Business bankruptcies dropped in 2012 and are expected to continue falling in 2013, which should ease the erosion of commercial accounts. Also, the number of business startups has been rising, which should further increase demand.
Not everything is looking better. Weisbart said the low-interest rate climate will likely persist throughout 2013 and into 2014, challenging insurers to price risks appropriately.
The moderator at the afternoon panel hailed what he said was the diversity on the panel, apparently referring to the size and stock v. mutual structure of the companies represented. Yet the diversity was not obvious– he and the panelists were 60-something white males. It is unlikely that female or minority P/C executives would have a different perspective on the economy or how to manage in today’s world. But it’s possible isn’t it?
Topics Property Casualty
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