A survey of chief financial officers (CFOs) with leading North American property/casualty (P/C) insurers indicates that both property and casualty insurance markets are hardening, demonstrating a shift in perception from two years ago.
Some 75 percent of CFOs participating in the North American Property & Casualty CFO survey by Towers Watson characterized the property market as hardening, hard or at the top of the cycle Ã¢â‚¬“ a nearly 30 percentage point increase compared to the survey results two years ago.
As for the casualty market, some 65 percent of CFOs said they see the casualty market as hardening, hard or at the top of the cycle Ã¢â‚¬“ a 52 percentage point increase compared to the previous survey.
Towers Watson reports that a narrow majority of CFOs who consider both the property and casualty markets to be hardening also believe these markets will remain that way for the next one to two years (51% for property, 52% for casualty).
Those who see hardening in the casualty market think it will last longer than in the property market.
Only 15 percent of CFOs responding to the survey believe the property market is softening, while 10 percent said the casualty market is softening.
In aÃ‚ press releaseÃ‚ Bruce Fell, a managing director in Towers WatsonÃ¢â‚¬â„¢s Risk Consulting and Software business, says:
“The impact of the softer market the past several years, combined with low interest rates, has hurt insurers’ profitability. The state of today’s market should give insurers some breathing room and an opportunity to increase their bottom-line.”
Towers Watson also asked CFOs about top challenges facing their businesses. Some 81 percent listed interest rates as their biggest economic and market environment concern, with natural catastrophes (44 percent) and inadequate rate levels (34 percent) next.
Nearly half (46 percent) indicated they are responding to todayÃ¢â‚¬â„¢s economic and market challenges by realigning their investment portfolio, while 37 percent said they are expanding into new products or markets.