There is now a good chance the property/casualty insuranceÃ‚ industry will show positive premium growth in 2010 Ã¢â‚¬“ the first such growth since 2006, according to I.I.I. president Dr. Robert Hartwig.
Dr. HartwigÃ¢â‚¬â„¢s upbeat prognosis came in his commentary on the industryÃ¢â‚¬â„¢s 2010 first nine month results:
Premium growth data for the third quarter appear to confirm that the era of mass exposure destruction in the property/casualty insurance industry is finally over, with demand for insurance now beginning to stabilize and recover in the aftermath of the Ã¢â‚¬Å“Great Recession.Ã¢â‚¬
Net written premiums were up 2.3 percent in the third quarter of 2010Ã‚ Ã¢â‚¬“ the first back-to-back quarterly growth since the first quarter of 2007.
Combined with a 1.3 percent decline in the first quarter and a 1.3 percent increase in the second, net written premiums were up 0.8 percent for the nine month period. As Dr. Hartwig says:
There now appears to be mounting evidence that the property/casualty insurance industry is benefitting from early-stage growth in the American economy, which is translating into insurable exposure growth.”
The industry results were just released by ISO and the Property Casualty Insurers Association of America (PCI).
The industry reported an annualized statutory rate of return on average surplus of 6.7 percent through the first nine months of 2010, much improved from 4.6 percent in the same period of 2009.
As has been the case since mid-2009, virtually all of the improvement in the industryÃ¢â‚¬â„¢s financial performance came from a massive reversal in asset values, Dr. Hartwig notes.
This allowed the industry to realize $4.4 billion in capital gains during the first nine months compared to a $9.6 billion realized capital loss a year earlier.
While insurers remain cautious about the economy and financial market conditions, there is guarded optimism that both will continue to improve as the industry transitions into 2011, he adds.