Strong competition and state regulators' efforts to restrain rates are expected to drive down the prospective return on equity for home insurers by a half-point this year, analysts said.
According to a study by Aon Re Global, the prospective ROE will stand at 6.5 percent versus 7 percent in 2007, and the firm suggested insurers must raise rates and work on their reinsurance arrangements.
Weighing down the countrywide return on equity–by 0.3 percent–is the expected assessment of residual market facilities, insurance vehicles which provide coverage to homeowners unable to obtain coverage in the private insurance marketplace, said Aon.
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