Property/casualty insurance companies continued to serve their clients despite the tough economic conditions that have defined the better part of the past decade as well as an increased number of catastrophic events in the first half of 2011. In the United States, in the second quarter of 2011, there were more than 80 catastrophes that resulted in billions of dollars of losses to insurers. This did not induce Mother Nature into taking a break from the storm activity, as additional losses are anticipated from the catastrophes that occurred during the third quarter of 2011.rfd
Despite these catastrophic occurrences and the overall economic uncertainty, for the six months ending June 30, 2011, P/C companies comprising the Top 25 writers of P/C insurance in terms of direct premium growth leveraged their experience and increased their direct premium written more than 11 percent over the six months ending June 30, 2011, an increase of approximately $4.5 billion in premium.
This is an impressive display of growth, financial stability and leveraging of experience by the Top 25 carriers. The Top 25 wrote over 18 percent of the P/C insurance industry’s direct written premium in the first half of 2011. However, in previous quarters, the Top 25 have consistently written more than 20 percent of the industry’s direct premium written.
In contrast, the more than 2,500 insurers that comprise the remainder of the industry did not fare as well, as their six month direct written premium increased a mere 0.6 percent, or $1.2 billion, over last year. In total, direct premium written for the P/C industry was up more than $5.7 billion.
This should be seen as good news and could be a precursor of how 2011 will end. The last time the P/C industry increased direct premium written over the first half of the prior year was 2007. This was also the last year in which direct premium written increased year over year.
It was noted during the first quarter that the growth in direct premium written period over period was not a result of rate increases due to disasters, since the disasters occurred after the financial results were reported. If companies increased their rates prior to these disasters, it was anticipated at that time that direct written premium would increase period over period for subsequent reporting periods as a result of further rate increases relating to the catastrophic weather events.
Any rate increases resulting from these catastrophic events should take effect in the coming reporting periods and increase the period over period results for direct premium written.
Moreover, as the June 30, 2011 results for direct premium written imply, the pricing cycle may have reached its bottom and firmer prices could become more evident in the following quarters. This might continue to assist all participants in the P/C insurance industry report period-to-period premium growth.