Way back on Jan. 5, I peered into my crystal ball for the likely Top-10 Property and Casualty Insurance Stories of 2009. Before you check on what turned out to be my actual picks, let's see how many of my predictions came true:
1: AIG's Fire Sale Comes Up Short! I was right when I predicted that "AIG will continue to struggle against the restraints imposed by meddling members of Congress as it sells more subsidiaries at bargain prices to pay off its federal bailout loan." However, my fear that AIG would require additional federal funds is thus far unfounded.
2: As The Market Turns! I was right on target in figuring that commercial insurance price cuts would level off, but would "not rebound as sharply as the industry hopes." I properly suggested "there is still too much competition in a contracting economy," noting that "troubled carriers are pricing aggressively to overcome reputational risks and maintain market share."
3: Obama To The Rescue! I was overly optimistic that President Barack Obama's stimulus package would "spur rapid exposure growth in the summer and fall, to the benefit of a multitude of insurers." However, it's encouraging that job losses are at least bottoming out.
4: Is There A Doctor In The House…Or The Senate? I was also premature in predicting that Congress would pass a health care reform bill by year's end, but we're a lot closer to game-changing legislation than we've been in decades. With no public option likely, insurers and their agents could enjoy a flood of new customers once mandates kick in.
5: Noah Gets Coverage, But Only For Floods! I was wrong to assume that Congress would reauthorize the National Flood Insurance Program for three years by March 6, but at least federal coverage hasn't been expanded for wind claims…yet!
6: Who Let The Cats Out? I was absolutely correct in predicting that Congress would not establish a National Catastrophe Fund to back up state insurance facilities, despite President Obama's rhetoric during the campaign to push such a plan–a pledge that helped him win Florida, and the White House.
7: Uncle Sam Spurns Insurance Oversight! Not only was I right about Congress not creating an optional federal charter, it looks like most insurers will be spared any significant federal regulatory burdens under financial services reform.
8: Insurers Get Urge To Merge! I expected a surge in mergers and acquisitions, given AIG's fire sales and trouble at other firms. But outside of a few major deals, M&A activity has been quiet.
9: NAIC Drops Ratings Initiative! I correctly figured that the National Association of Insurance Commissioners would not dare to create its own rating agency. There are simply too many financial and practical obstacles.
10: Spitzer's Back In Business! While Eliot Spitzer, New York's disgraced former governor and attorney general, has taken a more prominent public role this year, appearing as an expert media commentator on financial regulatory reform, I went too far in predicting he would be appointed to some federal post–warning that he might end up as Insurance Czar under a new federal oversight regime.
So there you have it. I was correct with four of my 10 predictions, dead wrong on four others, and half-right on the other two.
But that won't stop me from taking another stab at fortune-telling. Check out my column and blog of Jan. 4 to see my predictions for the Top-10 P&C Insurance Stories of 2010!
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