Low interest rates, rather than storm losses, are driving the bulk of the rate increases in the insurance industry, says a company CFO.
Speaking on a CFO panel at the 23rd annual Executive Conference, Michael McGuire, CFO at Endurance Specialty Holdings, predicted that the economy would be mired in a low-interest-rate environment for the foreseeable future, and he said the industry needs to see at least three more years of price increases. The line likely to see the biggest increases—of 10 percent or more—is workers' compensation, which is “like a noose” around the necks of carriers with a lot of workers' comp exposure on their books.
And echoing a sentiment heard from C-suite executives throughout the year, McGuire said there's now more focus than ever on underwriting profit: The days of being able to earn a respectable return on equity with a 110 combined ratio are long gone.
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