10 Insurance Ins and Outs, Ups and Downs of Year of Dragon 2012

In Chinese astrology, the year 2012 was the Year of the Dragon, a symbol of unpredictability and uncertainty. The dragon represents mystery because its head and tail cannot be seen at the same time, according to Chinese tradition.

So was the Year of the Dragon marked by mystery for the U.S. property/casualty insurance industry? Perhaps no more than any other year for an industry that is affected by both the weather and politics. The past year had its share of surprises, political as well as meteorological. But in terms of insurance markets and the economy in 2012, there was no great surprise, although there was frustration. By year’s end it was clear the dragon’s tail was a lot like the head —not what people had hoped for.

Every year has its ins and outs and ups and downs. Here is a recap of the insurance ins and outs and ups and downs of the Year of the Dragon 2012:

1. Roberts Rules

In what many thought a surprise, the Supreme Court said that Obamacare and the individual mandate were in keeping with the Constitution, which left employers trying to figure out what to do next and states having to decide whether to be in charge of their own health exchanges. A majority of states opted out, leaving the job up to the federal government. While health exchanges – and in some circles, Chief Justice Roberts– went out of favor, accountable care organizations came into vogue and interest in consumer-driven health plans shot up.

• Supreme Court Upholds Healthcare Law
• After Supreme Court Ruling, Employers Turn to Healthcare Law’s Requirements
• Chief Justice Roberts Viewed Differently After Healthcare Ruling
• Small Business Face Health Insurance Dilemma
• 15 States to Operate Own Health Exchanges
• More Employers Offering Consumer Driven Health Plans
• Path Set for Accountable Care Organizations

2. Super Losses

The year started out with a lot of inclement weather in the Midwest and the South but then settled down. Then Hurricane Isaac’s downpour hit Louisiana and the Gulf states and Superstorm Sandy tore up the Atlantic seaboard. By the time 2012 was up, it was in the record books as one of the deadliest and costliest storm seasons. Sandy was downgraded from a hurricane, leading to a bit of an uproar over deductibles. Fortunately, private insurers and reinsurers were in a financial position to handle the losses without going out of business.

• 2012 Got Off to Tough Weather Start
• Midwest, South Tornadoes Bring Insurers Losses
• Severe Weather Has Insurers Rethinking Coverages
• P/C Insurers’ Profits Jump in First Half as Catastrophe Losses Drop
• Isaac Insurance Losses
• Sandy Losses Manageable
• Hurricane Deductibles Controversy
• Deadly 2012 Hurricane Season Ends

3. Hard-to-Define Market

Expectations for a traditional hard market were out. Many price-sensitive commercial insurance buyers were down as insurers drove up commercial insurance rates over the course of the year. Interest rates and investment income remained down so tighter underwriting was in favor.

• P/C Insurers Face Obstacles on Road to Hard Market
• Corporate Buyers Prepare for Hard Market
• Commercial Insurance Rates Keep Rising
• Current Market Not Yet a ‘Classic’ Hard Market: P/C Executives
  
• P/C Industry Should Not Expect Traditional Hard Market Soon: Hartwig
• Construction Firms Face Hike in Liability Premiums
• Low Interest Rates Push Need for Strict Underwriting
• Low Interest Rates Challenge Insurers
• Commercial Buyers Accepting Higher Prices, More Restrictions

4. Wet ‘n Dry

The flood insurance program was in and out before it was downsized and reformed. Then Sandy threatened to take it down to its last dollar. Meanwhile it was a year of record drought that threatened to wipe out crop insurers’ profits. Up and down the coasts, worries over property exposures continued to keep many up at night.

• Flood Insurance Program Extended Until July 31
• President Obama Signs Flood Insurance Bill
• What to Know About Flood Insurance Program Reforms
• Sandy Losses to Hit Flood Program
• Crop Insurance Losses Mount
• Crop Insurers Could Face Fist Loss in 10 Years
• Millions at Risk from Rising Sea Levels
• Report Shows Increasing Concentration of Insured Storm-Prone Property Values

5. Day at the Breach

The risk of data breaches and cyber crimes continued to go up. Small business owners played down the need for cyber insurance. But risk professionals appeared to be more on top of the issue.

• Cyber Crime on the Rise
• New Cyber Threats to Financial Systems
• Only 1 of 4 Firms Buying Cyber Insurance
• Poll Finds Awareness of Cyber Risk Increasing
• Small Business Dismiss Risk of Cyber Breaches
• Broker Warns: ‘Wake Up’ to Cyber Threats
• Risk Has Shifted from Tangible to Intangible Property

6. Don’t Mention It

When the year 2012 started out, AIG was still in debt to taxpayers but by the time 2012 was out the government had gotten out of AIG’s business with a monetary leg up and AIG was out of debt to taxpayers, at least financially. Yet AIG still felt indebted so it rolled out a Thank You, America ad campaign. The Chartis name was out and a new logo was in.

• Treasury Sells Final AIG Stock
• Government to See Gain on AIG Bailout
• AIG Adopts New Logo
• AIG Resume Use of AIG Brand
• AIG Launches Thank You Campaign

7. Higher-ing

It looked like insurance employment was up, including opportunities for veterans.

• Insurance Employment Improving
• 15 Trends in Insurance Employment
• Insurers Plan More Hiring in 2012
• Disabled Veterans in Demand
• P/C Industry Enlisting Veterans

8. Down on Life

The Hartford fell out of favor with one of its largest shareholders as its profits went down, prompting it to get out of the life insurance business for the most part and double down on the property/casualty side.

• Paulson Steps Up Pressure on Hartford to Spin Off P/C Business
• Hartford Moving Closer to P/C Roots
• Hartford Bows to Pressure from Paulson
• Paulson Hedge Funds Cuts Holdings in Hartford

9. Technology Drivers

An influx of amazing new technologies continued to put up positive safety numbers and take us further down the road to where cars can drive themselves.

• Road Tests of ‘Talking’ Cars Underway
• Future Impact of Self-Driving Cars Would Be Big: Study
• Driving Toward a Future Without Humans Behind the Wheel
• Talking Cars May Help Humans Avoid Crashes
• Electronic Stability Control Saves Lives

10. Return to Work

Workers’ compensation insurers missed out on the recovery; results continued down with no quick or easy way up in sight.

• Workers’ Compensation Turn a Profit? Fahgettaboudit!
• Fitch: Workers’ Compensation Weakest Segment; Combined Ratio Worst in 10 Years
• Report: Workers’ Compensation Premium Grows But Market Results Still ‘Conflicted’

Topics Carriers Profit Loss Cyber Workers' Compensation Flood Hurricane Property Market Property Casualty AIG