Selective Insurance Group CEO Gregory Murphy says the insurance industry needs to increase rates for as long as low interest rates continue to hurt investment yields.

Murphy says during an earnings conference call that he expects the low interest rate environment to continue through 2014—which adversely affects insurers' investment earnings. Reflecting on his 33-years of experience in the industry, Murphy says one has to go back to 1950 to find interest rates of comparable level as today.

And to make up the revenue loss, companies are forced to “significantly improve their underwriting margins, which can only be achieved through substantial industry-wide renewal price increases.”

He went on to say companies that “socialize rate in this environment will only hurt their renewal business” and leave companies that underwrite risk individually—like Selective—at a competitive advantage.

Turning to the carrier's first-quarter results, the Branchville, N.J.-based insurer posted an increase of net income of 18 percent as price increases took hold in both its Personal lines and Excess & Surplus lines businesses. Both personal lines and E&S renewal prices increased 8.5 percent while commercial lines renewals reached 7.5 percent.

First-quarter income went up more than $3 million to $21 million on net premium written of $450 million, an increase of 7 percent. Premium rate increases in both Commercial and Personal lines drove the results along with light catastrophe losses of $1.6 million.

Chief Financial Officer Dale Thatcher says the “results exceeded our expectations” with an overall statutory combined ratio of 96.8, an improvement of 2.3 points over the same period last year.

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