By Mark A. Hofmann, Crain News Service
CHICAGO (Feb. 6, 2014) — This year should present a “stable to somewhat competitive environment for business insurance,” according to a study released Jan. 30 by Wells Fargo Insurance Services USA Inc.
In fact, the insurance market for commercial businesses and public institutions looks relatively stable for each line of business, with only a few lines of business expected to experience rate increases or decreases of 10 percent or more, according to Wells Fargo’s “2014 Insurance Market Outlook.”
The analysis pointed out that insurers enjoyed a profitable year in 2013, with the industry combined ratio improving to 95.8 percent during the first nine months of the year from 100.7 percent during the same period a year earlier. In addition, industrywide return on average surplus rose through the first nine months to 9.5 percent from 6.5 percent during the same period in 2012. Net written premium “grew modestly, as did investment returns, and policyholders surplus has reached an all-time high,” according to the analysis.
Pressure on insurers’ rates of return
But the study also noted that although 2013 showed marked improvement over 2012, “overall insurer rate of return still remains lower than it has been historically,” so insurers continue to feel pressure to increase their rate of return.
The report pointed out that market capacity is at an all-time high for most major lines of business. In addition, the analysis noted that the insurance-linked securities market for catastrophe perils has grown by 16 percent annually over the last three years, “as hedge funds and other capital market investors find these vehicles increasingly attractive as an uncorrelated area of risk with generally superior returns.”
If that rate of growth continues, alternative capacity could reach a global market share of approximately 25 percent by 2020, Wells Fargo predicted.
This report appeared in Crain’s Business Insurance magazine, a Chicago-based sister publication of Tire Business.
Titan International and the United Steelworkers union have petitioned the U.S. International Trade Commission and U.S. Department of Commerce seeking relief from OTR tire imports from China, India and Sri Lanka. What’s your opinion?
|I wholeheartedly support their action – something needs to be done.||
|I think it’s a bad idea that could inevitably tie the hands of domestic tire makers.||
|I oppose any duties against tire importers—they only raise costs for distributors and make it harder to obtain inventory.||
|I’m kind of on the fence and not sure what’s right, but need more information before deciding.||
|I don’t really care whether or not relief is granted.||
|Total votes: 78|