A report on Arizona’s property/casualty insurers issued on Thursday shows a drop in written premiums to $7.4 billion, and a large increase in losses incurred to $6.4 billion for 2010.
The report, from the Arizona Insurance Council, shows these and other economic impacts of the P/C insurance industry, which covers commercial, home and auto risks; 2010 is the most recent year for data.
The yearly compilation of data by AIC comes from numerous sources, including insurers and the Insurance Information Institute.
The report shows P/C premiums written by Arizona insurers have fallen steadily in the past four years: 2009 ($7.6 billion), 2008 ($8.1 billion), 2007 ($8.4 billion). Written premiums were $8.2 billion in 2006.
“It has been a trend of slightly decreasing written premiums,” said Ron Williams, executive director of AIC.
Williams attributes that downward trend to largely strong competition and the remaining impacts of the prolonged economic recession.
“During recessionary times people are looking to cut back on expenses whenever they can,” Williams said.
As a sort of double whammy on the state’s P/C industry, 2010 was also bad year because of intense storms, many of which caused “significant hail damage,” he said, adding that rising costs of parts and labor to repair those claims for commercial, home, property and auto were also contributors to the increase in losses incurred.
The $6.4 billion in losses for Arizona insurers in 2010 dwarf the last five years on record. They were up from $4.6 billion in 2009, and $5 billion in 2008. Losses were $4.8 billion in 2007 and $4.3 billion in 2006.
But Williams couldn’t say whether falling premiums and rising losses would be enough to start to turn the market in Arizona
“I don’t think anybody can really anticipate that,” he said. “There are so many factors involved between soft markets and hard markets. I don’t think anyone can really anticipate that.”
The report also shows the 950 insurers operating in Arizona have a significant economic impact on the state.
In terms of employment in 2010 there were over 28,000 P/C insurance professionals residing in the state, and insurance companies paid over $153 million in state premium taxes.
More than $9 billion of P/C insurers’ assets were invested in Arizona municipal bonds, according to the report.
Insurers invest in a variety of public projects including airport, street, highway and water utility construction, as well as education-related bonds, and insurers also purchase general obligation bonds that finance ongoing government operations, the report shows.
Was this article valuable?
Here are more articles you may enjoy.