Cash-strapped homeowners and automobile insurers have enacted the steep price increases necessary to recapture profitability, according to Standard & Poor’s just-published outlook for 2003, which puts the industry on a stable ratings footing.
Premium rate increases approaching 20 percent in homeowners insurance and 10 percent in auto coverage are driving a significant improvement in underwriting performance. These follow a sharp decline in the capital available for underwriting purposes (effectively, a decline in supply), caused by underwriting losses in prior years and by reduced values and returns in insurer investment portfolios.
Insurers have also fared well in reducing the damage inflicted on their balance sheets by mold claims. “Mold is largely an issue of the past and is rapidly receding as an issue of the present,” Charlie Titterton, a director in Standard & Poor’s insurance ratings, said.
Entitled ‘U.S. Personal Lines Insurance Outlook 2003: on the Path to Profitability’, the report is available to RatingsDirect subscribers at www.ratingsdirect.com.