Property And Casualty Insurance Cycle

N. American property/casualty CFOs expect market hardening: Survey

New York-based Towers Watson surveyed 40 CFOs at personal and commercial lines insurers of all sizes in June for “The Property & Casualty Insurance CFO Survey: The State of the Insurance Market,” and found that 74% of the respondents said they believed standard property market prices were at their bottom or turning upward.

And while 87% of the chief financial officers said they believed the casualty market was still soft or at the bottom of the cycle in June, 80% of them said it was within two years of hardening, according to a statement.

“Clearly, there are differences between the property and casualty markets, yet it does seem we are approaching a turn in the overall marketplace,” said Bruce Fell, a managing director of Towers Watson’s Risk Consulting and Software business, in a statement accompanying the survey.

The respondents also said they continue to face an uncertain economic climate, fierce competition and the continuing impact of major catastrophes, the consulting firm said in an analysis.

Market observers continue to debate the direction of prices in different areas of the insurance market after catastrophes in recent months, ranging from the March 11 earthquake in Japan to tornadoes in the U.S., caused losses in the industry.

At the Rendez-Vous de Septembre in Monte Carlo, Monaco, for example, Martin Sullivan, deputy chairman of Willis Group Holdings P.L.C, said the continuing soft reinsurance market may be the norm .

The report is available at www.towerswatson.com .

Ebook Tort Liability, Insurance Rates, and the Insurance Cycle ...

Markets for many types of property/casualty insurance exhibit soft market periods, where premium rates are stable or falling and coverage is readily available, and subsequent hard market periods , where premium rates and insurers reported profits significantly increase and less coverage is available. Conventional wisdom among practitioners and other observers is that soft and hard markets occur in a regular "underwriting cycle." Like price fluctuations in equity markets, fluctuations in insurance premium rates and coverage availability are difficult to explain fully by standard economic models that assume rational agents and few market frictions.

The mid-1980s "liability insurance crisis" remains the most infamous hard market in the United States. The dramatic increases in commercial liability insurance premiums and reductions in coverage availability for some sectors received enormous attention and motivated extensive research on those specific problems and on fluctuations in insurance prices and coverage availability more generally. Large catastrophe losses in the United States during the late 1980s and early 1990s spurred further interest in and research on the dynamics of reinsurance and primary insurance market pricing following large, industrywide losses.

The hard market for commercial property/casualty insurance that began in late 2000 and accelerated following the destruction of the World Trade Center in September 2001 has focused renewed attention on markets for commercial property, medical liability, general liability, and workers compensation insurance. With respect to general liability and medical liability insurance, substantial debate has arisen concerning the causes of rate increases and reductions in coverage availability and attendant implications for policy, such as tort reform to reduce the expected value and uncertainty of liability insurance claim costs, or additional regulation of insurers to help control allegedly imprudent underwriting and investment.

Pride and prejudice, a novel in three volumes

Romeo and Juliet

Crime and punishment

War and Peace

And Then There Were None