Property/casualty insurance CFOs expect to continue to face an uncertain economic climate, fierce competition and the lingering impact of major catastrophes. And, these challenges are the driving forces of the market. This is what data from “State of the Insurance Market”—the inaugural P&C CFO survey from
Forty CFOs representing commercial and personal lines participated in the survey, and many are optimistic about the future of the market. The majority (74 percent) of CFOs believe standard property market prices were at the bottom or turning upward, Meanwhile 87 percent of the CFOs believe the casualty market is still soft or at the bottom of the cycle—80 percent of these CFOs said it is within two years of hardening.
CFOs say their companies are increasing both property and casualty rate levels ahead of market increases. Those rates may increase very gradually if, as CFOs indicate they expect, reserve redundancies and capital positions take a while to erode. More than half said these redundancies will not be exhausted for over a year. Just under half of the survey participants believe it will be over a year before capital starts to erode. However, the majority of CFOs believe that incurred loss and loss adjustment expense ratios will increase in 2011 on both an accident-year and a calendar-year basis.
Further, the majority of CFOs believe the likely outcomes of the current property market will be changing rate levels (63 percent), improving financial performance (50 percent) and additional merger and acquisition (M&A) activity (35 percent). Turning to the casualty market, CFOs believe the key outcomes of the current market will be deterioration in financial performance (48 percent) along with increase levels of M&A (38 percent).
For more survey findings,
