Liberty Mutual's chief executive said the insurance industryneeds to review its underwriting in the Midwest and charge more forits homeowners coverage there, declaring that part of the nation acatastrophe zone.

Speaking last week during the Boston-based company's conferencecall with analysts, Edmund F. Kelly, chairman, president and CEO,said while the company performed well overall, the “one area ofconcern is the Midwest.”

He said the company is witnessing the most rate activity theredue to increased storm activity and mounting losses.

“As we look at the Midwest we cannot think but [to believe] thatthe industry is in the same denial it was in Florida five or sixyears ago,” Mr. Kelly suggested.

“I think it is about time that people start looking at what isgoing on there. The level of cat activity, I don't know whether thereinsurers are blind to it or not, but it is now a high cat area.Hurricane Ike was a Midwest hurricane. Whether it is tornadoes, icestorms, whatever, the Midwest is underpriced for homeowners and weneed more rate there,” he said.

The carrier performed well in the fourth quarter and year-end,reporting a profit for both periods, though the end of year numberssaw a slight decline from the previous year (see NU Online,“Liberty Mutual Sees 12% Net Income Increase In 4Q,” March 6).

He said all the company's filings have been for rate increasesthis year and 55 requests for the direct writer were approved. Theindependent agency arm has received 75 approvals and its newlyacquired Safeco unit received 112 approvals.

Mr. Kelly said the company is very pleased with the performanceof its relationship with the GEICO platform where Liberty isunderwriting homeowners insurance in four states. The company hasseen direct written premium of $11.7 million. He said the businessis split between 50 percent for rental, 40 percent dwelling and 10percent condominium.

“So far, the quality of business and loss experience has beenvery, very good,” said Mr. Kelly.