P-C Net Income Could Be Negative For 2001
Following the terrorist attack of Sept. 11, the property-casualty insurance industry is faced with responding to the largest insured catastrophic event in history. While underwriting results in 2001 were not previously showing signs of material improvement relative to the prior year, losses related to the attack will turn 2001 into one of the worst, if not ultimately the single worst underwriting period in industry annals.
Such horrific results, however, will likely set the stage for a sharp hardening of the commercial property/casualty market in 2002. This hard market will further differentiate the "winners" from the "losers" in an environment characterized by further flights to quality, which will dampen the ability of weaker insurers to respond to a very favorable pricing environment while grappling with higher reinsurance costs and sharp declines in reinsurance capacity.
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