There were indications at the beginning of the year that the volume of catastrophes in 2011 might lead to a firmer market in U.S. P&C insurance in 2012, which had been deemed "soft" for several quarters.
Now, studies of the market seem to bear that out. The Insurance Information Institute reports that P&C insurers' net post-tax income "jumped to $16.4 billion in first-half 2012 from $4.8 billion in first-half 2011, with insurers’ overall profitability as measured by their annualized rate of return on average policyholders’ surplus climbing to 5.9 percent from 1.7 percent."
This is partially attributable to net losses and loss adjustment expenses from catastrophes falling by about half year-to-year.
"A firming in the pricing environment would help the bottom line on a sustained basis," Robert Hartwig, I.I.I. president, wrote on the organization's website. "While pricing in personal lines (which account for approximately half of all premiums written) has been trending positive for several years, and appears likely to continue that trend through 2012, commercial lines pricing also finally appears to be much firmer than a year ago."
That sentiment was echoed by Marsh, whose Risk Management Global Insurance Index found that "the U.S. market showed that for the second quarter in a row, U.S. companies were more likely to experience rate increases than decreases in major lines of insurance," according to a statement.
Globally, prices across major lines went up 0.9% in the third quarter of 2012, Marsh said.
Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio