Declarations

Thumbs Up For FIO Leader

“As Director of the FIO, it will be vitally important for [Michael McRaith] to bring this expertise to bear in helping assure that the U.S. and global insurance regulatory systems are both effective and efficient and support vibrant and competitive private insurance markets.

—Ann Pusey, president and CEO of the American Insurance Association, on the appointment of Illinois state insurance regulator McRaith to head the new Federal Insurance Office set up under 2010’s Dodd-Frank Wall Street and financial industry reforms to monitor insurers. The FIO will advise Congress and various federal entities on insurers’ systemic risk exposure.

A Hardening Market?

“I think we’re going to see continuance of deterioration of underwriting losses, fewer reserves released, continuance of low investment yields. And so, each of those three things are pointing towards a hardening market and a continuance of that.”

—Jon Wright, SNL Financial’s director of insurance. Analysis by Virginia-based SNL Financial concluded that insurance prices are rising, and the prolonged soft market is ending, contrary to earlier reports from other analysts. SNL said personal lines pricing is hardening and commercial lines pricing is moving in that direction such that premium increases can be expected.

Inadequate Prices

“The urgings of Wall Street, pressures from the agency force and brokers, or simply a refusal by a testosterone-driven CEO to accept shrinking volumes has led too many insurers to write business at inadequate prices. ‘The other guy is doing it so we must as well’ spells trouble in any business, but none more so than insurance.”

—Warren Buffett, chairman of Berkshire Hathaway, in his annual letter to shareholders. Berkshire Hathaway, which makes much of its money on insurance and investing insurance premiums, does not provide liability insurance for its own directors, Buffett revealed.