KBW: Slowdown in Rate Increases Not Surprising, but Concerning

The slowdown in the insurance industry’s pricing momentum is not surprising to financial-analyst firm Keefe, Bruyette & Woods, but it is concerning, as a return to normalized levels of both catastrophes and loss-cost inflation could cause problems for the industry when combined with rate deceleration/decreases, the firm says.

KBW expects strong fourth-quarter underwriting results for the property and casualty industry in light of below-average catastrophe losses. But that positive news for the industry “will be accompanied, and in some cases overshadowed” by “disappointing pricing rhetoric,” KBW says. The firm notes that it is not surprised about the statements on pricing given insurers’ “superficially acceptable” 2013 results.