In the midst of the financial turbulence, it’s easy to lose sight of longer-term trends. The economic downturn doesn’t necessarily mean the end of certain industries, but it does imply that there are some changes ahead. The global property/casualty (P/C) insurance industry is no exception, according to industry analysts.
In an article published by Standard & Poor’s Ratings Services, analysts write that the industry has survived through financial turmoil in the past and it will survive again.
But as industry conditions change, S&P believes that P/C companies will have to adapt to longer-term trends (during the next 10 years), according to the article, titled “The Key Issues For Property/Casualty Insurers During The Next 10 Years.”
“In the next few years, we believe the P/C industry will have a hard time achieving rapid growth,” said Standard & Poor’s credit analyst Damien Magarelli.
“The financial crisis is playing a role in the growth slowdown we’re expecting for the P/C industry over the next few years, because policyholders may reduce coverage and increase retentions to lower their insurance premiums,” said Magarelli. “Also, some industrialized countries are showing negative premium growth rates.”
Some of the issues that S&P believes P/C insurers will face are:
— Global economic conditions are affecting premium growth rates, with more growth occurring in the emerging markets.
— Populations are shifting, both globally and in the United States, meaning companies will need to focus on different geographic areas.
— Terrorism risk will pose potentially large losses for the P/C industry, yet many countries are taking steps to limit these losses.
— Natural catastrophes have played a major role in the P/C industry and will continue to influence pricing cycles.
— Some of these issues have led to government intervention by way of regulation, which could continue. An element of this is Bermuda’s changing role in the industry as more and more companies go global.
Was this article valuable?
Here are more articles you may enjoy.