Slow-developing conditions among key insurance underwriting cycle indicators are increasing the uncertainty in critical insurance forecast drivers and likely delaying any near term recovery of firmer pricing conditions, according to the most recent edition of Conning’s Property-Casualty Industry Forecast & Analysis.
“Conning’s 2011 forecast is for moderate net premium growth over 2010 of between 3 percent and 4 percent and additional deterioration in the underwriting results of about 2 percentage points,” said Clint Harris, analyst at Conning Research & Consulting. “Assuming the economic recovery continues at a modest pace, expected small increases in premium exposures in personal auto and in most commercial lines are the principal drivers of the premium increase. The forecast combined ratio, between 102 and 103 percent, includes a projected average annual natural catastrophe loss of about $19 billion. Storm damage in the first half of 2011 has been following the pattern of 2007-2010 at above average levels, so much will depend on second-half tropical storm results.”
The Conning Research service, “Property-Casualty Forecast & Analysis” forecasts industry growth and performance for 2011-2013. The report is based on Conning’s proprietary property-casualty industry model and analysis of key industry drivers, data and reporting.
“The forecast drivers for 2012 and 2013 include an expectation of somewhat more robust economic growth rates than in 2011, and the beginning of some premium rate-firming in commercial lines. Personal lines are expected to see continued single-digit rate firming, with some modest growth in exposures as well,” said Stephan Christiansen, director of research at Conning. “We forecast net premium growth rates of near 5 percent for each year, well short of what would be considered a meaningful turn in the underwriting cycle. Moreover, much of this is dependent on the pace of the still-sputtering economic recovery, and related cost and exposure drivers. The turnaround in commercial lines pricing also assumes tailing off of loss reserve releases and a delayed recovery of investment yields, placing additional pressure on operating margins. ”
Conning’s “Property-Casualty Forecast & Analysis” is available for purchase from Conning Research & Consulting by calling (888) 707-1177 or by visiting the company’s web site at www.conningresearch.com.
About Conning Research & Consulting
Conning Research & Consulting is a division of Conning, a provider of asset management and insurance industry research and consulting services to insurers. Conning Research & Consulting has published independent insurance industry research for 50 years, including market coverage of 30 segments of the industry in addition to industry forecasting and identification and analysis of major strategic issues. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and provides in-depth analyses on a wide range of industry products and issues. Conning is headquartered in Hartford, CT.