P/C Insurers See Surge in Cyber Insurance, M&A Activity in 2015

Property/casualty insurance executives overwhelmingly predict growth in both cyber insurance and merger and acquisitions (M&A) activity in 2015, according to a new Insurance Information Institute annual survey.

I.I.I.’s survey of executives attending its annual Property/Casualty Insurance Joint Industry Forum also revealed expectations for another growth year for equity markets. Industry leaders expect growth in the combined ratio, however.

Reflecting concerns about federal government encroachment into insurance regulation, 72 percent of respondents said they believe the federal government wants further expansion of its regulatory oversight authority over the industry. Just 28 percent disagreed. Those results are similar to I.I.I.’s survey from last year, when 68 percent predicted higher loss rations in 2014 than in 2013.

Compared to 2014

Last year’s survey by I.I.I. also showed many executives expecting a stricter regulatory environment in the year ahead, with a similar 70 percent expecting the federal government to expand its regulatory oversight of insurers.

However, cyber insurance was not front of mind for P/C executives survey last January; rather the federal government’s flood insurance and terrorism reinsurance programs were top concerns. Then, 93 percent expected Congress to renew TRIA, which finally happened this month. Also 75 percent predicted Congress would roll back some of the rates and changes made by the Biggert-Waters Flood Insurance Reform Act, which Congress did do last March with the Homeowner Flood Insurance Affordability Act.

Other 2015 I.I.I. survey results include:

• Nearly 80 percent of respondents said commercial insurers could experience major growth in cyber insurance over the coming year, where just 20 percent disagreed.
• A sizable 92 percent say M&A activity for both insurers and reinsurers will increase in 2015, echoing predictions that have been heard since late 2014.
• About 74 percent said they expect combined ratios to be higher in 2015 than in 2014, compared to 26 percent who predict otherwise.
• 78 percent of respondents said that industry capacity (as measured by policyholder surplus) will increase. Just 4 percent expect a decrease and 18 percent said capacity will remain flat.
• About 36 percent of respondents said premium growth will be higher in 2015 and 18 percent said premium growth would be lower. Nearly half – 46 percent – said premium growth will be flat compared to 2014.

Topics Mergers & Acquisitions Cyber Carriers Legislation Property Casualty