P/C Insurers’ Combined Ratio for 2011 Estimated at 107.5%

February 6, 2012

  • February 6, 2012 at 1:33 pm
    RetireUW says:
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    How did it come to this? The P&C industry is its own worst enemy. Competition did not drive prices down…greed did. Combined ratios can only climb now. There are no more “redundant” (inflated) reserves to take down. Companies can no longer pay claims with surplus because stockholders expect surplus to be paid as dividends.

    Year after year the agent beats the hell out of the wholesaler who beats the hell out of the underwriter to achieve some irresponsible pricing threshold. Then, after the agent wins the “bid game”, he thumps his chest and cries out “Look what I did! I gave my insured a renewal with a 15% rate reduction, and I made 50% less commission than I did 3 years ago! Man, am I good or what!”

  • February 6, 2012 at 5:26 pm
    large carrier says:
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    and yet agents can’t correlate this and the need for increased pricing. 9 years of decreases at 5-10% each year and now have to explain to some AM the insurance cycle and the reason we need to increase rates. Should be a joy the next 2 years. Leave me as a friend, come back as a stranger.

    • February 13, 2012 at 5:52 pm
      Jim O'Brien says:
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      Take a good look at how drastically the carrier loss control staffs have been reduced and the extent to which l/c services have been reduced or eliminated and you’ll find a correllation to the high loss ratios in our industry.

      While there may be some need to increase rates (I’m not so certaing there is, however), there’s (obviously) a greater need to reduce losses in order to turn the loss ratios profitable again. The best way to do that, in my humble opinion, is to re-commit resources to loss control engineering services in a major way.

      Industry “managers” have reduced l/c staff & operational budgets so significantly over the past two – three decades that the thought of reducing losses through engineering efforts doesn’t even show up in most conversations that I’ve seen.

      Call me an old fuddy-duddy, but, I can remember (way-back) when we (a large property insurer) visited our risks at least 2X / year (if not more frequently) and ran loss ratios in the 75% – 85% range charging “HPR” (very low) rates. That engineering effort certainly was expensive, but, not nearly as expensive as a 107% loss ratio would have been. The result was good risk selection, good hazard control, risk improvements that were good business for insured and insurer and continuously successful renewals related to the good service that the insured felt they were given.

      Unfortunately, when a company is looking for ways to improve profitability, those valuable elements can’t be quantified as easily as drastic staff reductions can be seen by those who hold the “purse strings”.

  • February 7, 2012 at 3:44 pm
    RetiredUW says:
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    It’s a spiral that will never end.

    Those who do not know history’s mistakes are doomed to repeat them.

  • February 7, 2012 at 4:22 pm
    Agent says:
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    It is nice to see a return to discipline and underwriting profitability for overall success instead of relying on investment income and the float.

    As long as interest rates remain low, insurers should be prudent and pay more attention to the quality of risks that they put on their books.

  • February 8, 2012 at 1:57 pm
    personal lines says:
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    In the end agents have to compete with the internet and try to make a buck as well. Its not our fault that the industry is selling their souls to new business and hammering the book with premium increases. Thus creating the cycle again.

  • February 17, 2012 at 11:25 am
    Insuranceguy says:
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    I agree the internet has been a game changer. I think this trend will only accelerate. It’s also true that the industry seems to be using new business price discounting strategies to attract new premium, to the detriment of existing insureds. I have even seen one of the usual suspects on TV recommending mid-term shopping for auto or home insurance. This does not make me optiminstic about the future of agency.



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