The ancient Chinese curse, “May you live in interesting times,” never resonated more within the property-casualty industry than it did in 2008, when the fallout from the subprime mortgage crisis nearly destroyed the nation’s highest-profile carrier, seriously undermined the balance sheets of nearly everyone else, and set the stage for the worst economy since The Great Depression. These macro-economic factors and the political fallout from them helped determine the top insurance news stories in 2008.
The accompanying “NU Top-10″ list is totally subjective. These are the developments I felt were the most interesting of the year, based on my personal opinion and the feedback I received when commenting on these particular subjects in my column and blog.
Indeed, if you feel I’ve overlooked a key event, write and tell me so at email@example.com, or post a comment to this introduction on my Dec. 19 blog entry at www.property-casualty.com.
As you casually glance through the accompanying index of stories, I can’t imagine anyone arguing about AIG’s near collapse being the top story of 2008.
AIG became the poster child for our controversial, haphazard bailout process, as the country’s most prominent insurer was slammed again and again for trying to do business as usual after being kept out of bankruptcy by Uncle Sam’s generosity with up to $150 billion (and counting!) in taxpayer dollars.
The financial meltdown and its impact on the insurance industry was a natural pick for second place. Given the stock market collapse, credit crunch and economic contraction that followed, insurer surplus was drained at a remarkably quick pace, and earnings reports were grim all around.
Looking ahead, massive layoffs, business failures and the slowdown in the number of startups to a trickle all pose stiff challenges to an industry searching for top-line growth to make up for depressed investment income and rising reinsurance rates.
Last year, the seemingly bottomless soft market was the story of the year, and the fact rates are still falling for so many accounts despite the economic turmoil not only testifies to the industry’s gross overcapitalization, but makes this subject a worthy number-three story.
Developments in Washington took fourth place, especially given the remarkable victory of our nation’s first African-American president, Barack Obama, who is likely to have quite an impact on the insurance landscape, from health care to catastrophe coverage.
Rounding out the top-five was the industry’s worst nightmare–a resurgence in catastrophe losses after two blissfully quiet hurricane seasons. While nothing approached a Katrina-like event, there were enough storm losses–led by the nasty Hurricane Ike–to run up more claims than the last two years combined.
The next five stories are nowhere near as heavy-duty in terms of market impact, but are fascinating twists of fate nevertheless.
What will be the Top-10 Stories Of 2009? Check out the Jan. 5, 2009 edition for my predictions! And if you want to verify my predictive powers, see page 5 for a tally of how I did last December picking this year’s hottest stories.
Meanwhile, have a very happy, healthy and profitable new year!