The federal government shutdown that began on October 1 will have no impact on property/casualty insurer claims or sales operations, according to I.I.I. president and economist Dr. Robert Hartwig.
In his commentary on the industryÃ¢â‚¬â„¢s 2013 first half results, Dr. Hartwig also noted that P/C insurers are well positioned to ride out increased financial market volatility attributable to the shutdown as well as the looming debt ceiling debate in mid-October.
Profitability in the P/C insurance industry rebounded sharply in the first half of 2013.
Dr. Hartwig noted that the improvement was propelled chiefly by growth in premiums, a reduction in catastrophe losses and favorable prior year reserve development.
As a result the industry combined ratio fell to 97.9 in the first half of 2013 from 101.9 in the first half of 2012Ã¢â‚¬”leading to an underwriting profit of $2.3 billion.
Dr. Hartwig noted:
The industryÃ¢â‚¬â„¢s bottom line benefited commensurately as overall net income after taxes (profits) surged by 42.4 percent during the half to $24.5 billion from $17.2 billion in the year earlier period, pushing the industryÃ¢â‚¬â„¢s return on average surplus up to 8.2 percent, up from 6.2 percent in the first half of 2012 and well above the 5.9 percent and 3.5 percent returns recorded for full-year 2012 and 2011, respectively.”
Continued and steady premium growth also contributed to the improved underwriting performance, as net written premiums were up 4.5 percent during the half, up from 3.7 percent gain recorded in the first half of 2012 and 4.7 percent in the second quarter.
This marked the thirteenth consecutive quarter of growth and the longest continued period of growth in nearly a decade, Dr. Hartwig said.
Another positive was that policyholdersÃ¢â‚¬â„¢ surplus reached a new all-time high of $614.0 billion as of June 30, 2013Ã¢â‚¬”up $34.7 billion, or 6.0 percent, from $579.3 billion as of year-end 2012.
Despite the surge in industry profitability, overall investment gains were flat. Dr. Hartwig commented:
Persistently low interest rates, of course, remain a challenge for the industry, with net investment income during the half slipping by $0.7 billion or 2.8 percent compared to the first half of 2012.Ã¢â‚¬
The industry results were released by ISO, a Verisk Analytics company, and the Property Casualty Insurers Association of America (PCI).