A survey at the Insurance Information Institute’s (I.I.I.) annual Property/Casualty Insurance Joint Industry Forum finds respondents somewhat sanguine about the industry’s financial prospects.
When asked if they believe the industry is on the road to recovery, 72 percent of respondents answered yes. Likewise, 75 percent of the industry executives surveyed expect an improvement in profitability in 2012. Broken down by lines of business, respondents evinced the greatest optimism for improved profits in commercial lines, with 72 percent indicating they expected pricing to improve. Elsewhere, 63 percent of respondents believe there will be an improvement in personal auto and 67 percent expect an improvement in homeowners. Workers' compensation was a notable exception with 55 percent indicating that they do not expect an improvement.
“The consensus among forecasters is for growth of the U.S. economy in 2012 at a little over a 2 percent annual rate, net of inflation,” Dr. Steven Weisbart, SVP and economist with the I.I.I. said in a statement. “In that scenario, the demand for property/casualty insurance will increase modestly, both in terms of personal and commercial coverages.”
Accordingly, survey respondents were also optimistic about premium growth with 67 percent indicating that premium growth will be higher; 31 percent saying it will remain flat, and only 2 percent believing it will be negative.
“The industry is well capitalized to provide this additional coverage and to pay claims under it without difficulty,” Weisbart added. “Rates will be determined, as they should be, by state- and local-level market conditions, recognizing the impact of inflation on claims and the effect of lower investment income than the industry has earned in prior years.”
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