74 percent said premium growth will be higher in 2013; 21 percent said it will remain flat; 5 percent said it will be lower, according to a survey of 95 P&C insurance executives conducted by the Insurance Information Institute (I.I.I.).

These high expectations come despite the fact that respondents believe Washington’s ongoing budget battles will have a negative impact on the U.S. economy; yet, 23 percent said the U.S. economy is “on the right track” for the New Year. In addition, 74 percent said the federal government would like to expand its regulatory oversight of the insurance industry.

“As the economy continues its recovery, exposures will continue to grow implying further increases in insurance premium volume,” said Dr. Steven Weisbart, SVP and chief economist for I.I.I. “Moreover, business bankruptcies in 2012 dropped below their level at the start of the 2007-'09 recession and are expected to continue falling in 2013, so the erosion of commercial accounts will continue to ease. Moreover, the number of business startups has been rising, further feeding the demand for commercial insurance in 2013,” he added. “However, the low-interest rate climate, which will likely persist throughout 2014, will challenge insurers to price risks in closer relation to their claims potential.”

Highlights from the survey:

59 percent said there will be an improvement in both personal auto and homeowners lines

68 percent expect an improvement in commercial lines

61 percent do not expect an improvement in workers compensation

In terms of capacity, as measured by policyholders’ surplus, 71 percent said it will increase; 18 percent said it will remain flat; and 11 percent said it will decrease

62 percent said the combined ratio will be lower in 2013 than last year. The combined ratio for the first nine months of 2012 improved by 8.9 percentage points to 100.9 percent from 109.8 percent for the same period in 2011. A combined ratio greater than 100 means that claims payments plus expenses exceeded insurance premiums. One way to lower expenses is by consolidation

54 percent said they expect an increase in consolidation among insurers and reinsurers, which is one way to lower expenses

51 percent said tort trends will deteriorate in 2013; 44 percent said it will remain the same; and 5 percent said it will improve.

64 percent expect an “up” year in equity markets for 2013. Equities constitute 15-to-20 percent of invested assets, while bonds are 70 percent

62 percent said interest rates will remain flat; 38 percent said they will rise; none expect interest rates to fall.

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