Overview and Outlook for the P/C Insurance Industry

This PowerPoint report, presented by Robert Hartwig, president of the Insurance Information Institute, at the Vermont Captive Insurance Association’ Annual Conference, offers a review of the property/casualty (P/C) insurance industry, with a focus on the U.S. budget crisis and the recent S&P downgrade of U.S. debt and a discussion of trends in global and U.S. captive formation. Concerning the S&P downgrade, the report notes that there will be little practical impact on P/C insurers as sovereign debt accounts for 6 percent ($80 billion out of $1.3 trillion) in invested assets and that solvency, liquidity and claims paying capacity will all be unaffected. Concerning captive formation, the presentation notes that despite the soft market and weak economy, captives continue to grow globally. The number of captives worldwide increased by 736, or by 15.1 percent, between 2005 and 2010. The report also looks at the four criteria necessary for the market to turn: underwriting loss trends, capital and capacity, reinsurance markets, pricing discipline; and at other contributing factors to the underwriting cycle, including the investment environment, the tort/casualty environment, inflation and the economic environment.