The recession’s impact on the property/casualty industry has been felt country-wide, notes new research, but unique characteristics of the states in which insurers operate will affect just how quickly insurers can recover.

A report, “Anticipating State Variations in Personal Lines Performance,” published by Conning Research & Consulting this week, analyzes why individual states’ insurance market growth and profitability differ, and the implications for insurers and for regulators. The scope of the study is confined to homeowners and private passenger automobile insurance, but the concepts presented and the framework for analysis are broadly applicable to all lines of property/casualty insurance, notes the firm.

“The recession has had profoundly different effects on different states, and it is very likely that the recovery will as well,” said Alan Dobbins, analyst at Conning. “Exposure growth, pricing, regulatory activity and other key factors have varied widely by state during the recession, and the differences may be dramatic looking forward as well. Some of the hardest charging states prior to the recession were hit very hard, and will take a longer time to climb out, while others may well spike in the coming recovery.”

The study notes that having an understanding of how insurer performance may change when either economic or local conditions prevail is a critical ingredient to successful economic recovery.

“Analyzing the key variables that influence state profit potential is critical in identifying opportunities and threats for the insurance organization,” said Stephan Christiansen, director of research at Conning. “Conditions can change quickly in a state, yielding big changes for market participants and big opportunities for those considering market entry. If we understand the unique characteristics of the states that create the conditions for out-performance and under-performance, we can gain an understanding of how performance may change when either economic or local conditions are in flux.”

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