A new report released by A.M. Best Co. Inc., has stated that the unprecedented number of natural disasters, poor returns from investments, and an economy that continued to struggle in 2011, has made it exceptionally difficult for the American property and casualty insurance industry’s commercial insurance and reinsurance sectors to grow and has caused notable hurt to their operating performances.
It’s estimated by the rating agency, based in Oldwick, New Jersey, that last year’s underwriting losses from underwriters in the commercial property and casualty sector were approximately $15.2 billion. This sent the combined ratio for the segment up from 2010’s 102.7 percent to reach 108.2 percent last year.
The report stated that although there was an increase in the net premiums that were written due to the discipline in the industry for pricing and underwriting, the commercial/property and casualty insurers’ net income fell to $11.7 billion last year, which is a drop of 40.3 percent. It also estimated that the premiums had increased to $181.2 billion, a rise of 3.9 percent in 2011, which was the first time since 2004 that there was a year-to-year increase.
According to Best, a notable amount of the underwriting losses experienced by the industry were the result of the extensive American wildfires, flooding, and severe storms, in addition to the contingent and primary business interruption losses that occurred as a result of catastrophic events occurring internationally, for example the earthquake and tsunami in Japan and the flooding in Thailand.
The report explained that there was especially high property and casualty industry damage last year since many of the individual loss events in the United States were not large enough to set reinsurance programs into effect, which meant that the underwriters remained responsible for larger portion of the insured losses.
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