Longtime insurance veteran Charles L. Ruoff, president of the consulting firm CR Market Strategies Inc., says a recent report from the Consumer Federation of America (CFA) raises some valid points concerning a shrinking marketplace and the need for the industry to take on more risk, such as flood coverage. (Released Feb. 17, the report suggests that insurers are shirking their responsibility to assume risk and instead are passing it onto consumers and taxpayers.)
However, Ruoff's major objection to the CFA report is that it failed to use data specific to the homeowner's market, such as the examination of market cycles. He points out that the homeowner's market is 12-14 percent of the total insurance market, and the researchers should have isolated those earnings for review to make their point.
Ruoff says CFA's criticism that the P&C industry has excessive surplus is “not a rational conclusion.” While surplus for the industry stands at more than $580 billion, he notes that “it supports a lot of other risks” and the figure cannot be viewed as supporting just the homeowners' market.
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