TOP 10 P&C INSURANCE STORIES OF 2005
Broker fee probes, WTC trials, grand slam of hurricanes dominate the headlines
It was all going so well, with 2005 shaping up to be a banner year for property-casualty insurance carriers.
Through June 30, the industry posted a record high $23.5 billion in net income, fueled in part by a rare net underwriting gain of $9.0 billion. Surplus was up 6.8 percent. The combined ratio had fallen to a relatively stellar 94.4, putting insurers on track to post their best underwriting performance since the early 1950s.
Unfortunately for p-c insurers, 2004 didnt end on June 30. A grand slam of four major hurricanes hammered Florida and a number of other states in late summer, wiping out much of the gains the industry had achieved on its bottom line. Indeed, the four storms together will add at least $20.5 billion to claims costs.
At the same time, the p-c industry was blindsided by another catastrophe of major proportionsHurricane Eliotas in New York Attorney General Eliot Spitzer, that is. The scourge of Wall Street and the mutual fund industry trained his harsh spotlight on p-c brokerage abuses, unearthing evidence of outrageous bid-rigging between the nations biggest intermediary, Marsh, and some of the most influential carriers in the market. The price-fixing schemes also helped earn Marsh substantial contingency fee revenue which critics decried as bribes and kickbacks, calling the entire brokerage compensation system into question.
The fee investigations are just beginning, and the repercussions are far from over, although the impact has already shaken the foundation of the brokerage business and brought down one of its most powerful playersMarsh & McLennan Companies Chairman and CEO Jeffrey Greenberg. Looking ahead, all we know for sure is that the scandal will force substantial changes in the way the brokerage industry does business.
And thats not all. The hard market is definitely over, with prices in commercial lines continuing to moderate and many buyers enjoying substantial cuts at renewal. Meanwhile, two juries delivered a split decision on coverage for the emotionally-charged World Trade Center property losses. In addition, the future of the Terrorism Risk Insurance Act remains in doubt with its expiration looming largeone of several key news stories in 2004 that will reverberate into next year and beyond.
The following “Top 10″ list is my own, and the analysis included is all personally-generated. However, my choices were not arbitrary. In tracking the activity on our “NU Daily News” Web site (see www.NationalUnderwriter.com), the top-100 stories in terms of reader hits showed several themes clearly dominating. The readers choices are reflected in my ranking and commentary.
However, if you feel Im mistaken in my choices or ranking, or have left some key story out, please feel free to write me at [email protected]. Were always eager to get feedback and guidance from our readers.
Good luck in 2005!
Reproduced from National Underwriter Edition, December 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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