Conning: Future Glum For Personal Auto Line
NU Online News Service, Jan. 10, 12:32 p.m. EST?Personal automobile insurers will sustain disappointing financial results through 2007, an insurance research group is predicting.
Conning Research & Consulting Inc., Hartford, Conn., released a study that forecasts auto insurers will experience poor financial results over the next five years, continuing a pattern of unsatisfactory results dating back to 1993.
In a study, entitled "Caution Flag for Personal Automobile Insurance," the research firm analyzed the personal auto line over the past nine years against two benchmarks: premium growth equal to gross domestic product growth and return on surplus of 12 percent. Not once during 1993 to 2001, Conning said, did the industry achieve both benchmarks in the same year.
"Personal automobile insurance shrank as a portion of the U.S. economy and generated a return on surplus of only 7.8 percent during 1993 to 2001," said Michael Weinstein, director of research, Conning Research & Consulting in a statement.
"Given the frequency of outright poor results on a year-by-year or insurer-by-insurer basis, Conning sees danger on the track. The nature of the marketplace will prevent those trailing the leaders from moving up," said Mr. Weinstein.
The Conning study analyzed the results of 161 insurers for personal auto from 1993 to 2001. It says it found that only 15 insurers achieved averages exceeding the benchmarks for both growth and return on surplus. The study explores why those insurers succeeded and the industry did not.
Conning said its sees little reason to expect broad improvement during the period 2003 to 2007.
"We expect no fuel injection to boost the performance of most personal automobile insurers over the next five years," said Mr. Weinstein.
Additional information concerning the report is available at www.conningresearch.com.
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