Analysts Wonder If Hard Market Has Legs
NU Online News Service, Oct 8, 10:35 a.m. EST?Insurance analysts in a meeting with company executives forecast a hard market for the industry though 2003, but they questioned whether it will last beyond that.
At issue, they said, is whether carriers have the discipline to maintain across-the-board 15 to 20 percent increases into 2004, though they still need to recover from past under-pricing.
The observations were made during a panel last Sunday at the 89th annual Insurance Leadership Forum at the Greenbrier in White Sulphur Springs, W.Va., sponsored by the Council of Insurance Agents and Brokers, based in Washington, D.C., and the Council of Insurance Company Executives.
The CIAB, in a report of the session, said speakers included V.J. Dowling, an industry stock analyst from Dowling & Partners; Muck Puccia, managing director of Standard & Poor's; and Jody Jonsson, a financial analyst with Capital Group, who discussed the state of the insurance industry's finances.
According to the CIAB, the experts agreed one of the most significant issues facing the industry is lack of reserves to cover the cost of liabilities from coverage written at inadequate prices.
Although the market had begun to harden last year and accelerated that trend after the Sept. 11 terrorist attacks, in general the experts agreed the industry remains seriously under-reserved.
The reserve numbers could range from $80 to $120 billion, depending upon the expert's opinion, CIAB said. If the 15 to 20 percent increases do not continue for a couple of more years, some insurers could be seriously affected and some ratings may need to be reexamined in the future.
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