NU Online News Service, Jan. 13, 9:46 p.m. EST

NEW YORK—Three-quarters of executives surveyed at the Property/Casualty Insurance Joint Industry Forum here say the industry can expect an improvement in profitability in 2012.

Profits will improve in most P&C lines, according to the Insurance Information Institute survey, with 63 percent saying there will be an improvement in auto lines and 67 percent expecting an uptick in profits in homeowners' lines.

More than 70 percent of the nearly 250 survey respondents expect an improvement in commercial lines, but a majority (55 percent) says not to look for any upgrade in the workers' compensation line.

According to Steven Weisbart, senior vice president with the Insurance Information Institute, the U.S. economy is expected to grow at a little over a 2 percent annual rate, net of inflation.

“The industry is well-capitalized to provide this additional coverage and to pay claims under it without difficulty,” he says in statement. “Rates will be determined, as they should be, by state- and local-level market conditions, recognizing the impact of inflation on claims and the effect of lower investment income than the industry has earned in prior years.”

More than two-thirds of P&C leaders expect higher premium growth in 2012. Just 2 percent thought premium growth will be negative this year.

Though 78 percent of survey takers believe the industry's combined ratio will be lower in 2012 (It was 108.2 after nine months in 2011), not many think consolidation among insurers and reinsurers will part of the reduction. More than 70 percent say they do not expect an increase in consolidation.

Natural catastrophes obviously played a large role in knocking down insurers' profits in 2011, but low interest rates and dim investment gains also contributed.

Just 19 percent say interest rates will rise in 2012 while 78 percent say interest rates will stay flat. Turning to the equity markets, 75 percent expect an up year.

Two-thirds of leaders taking the survey at the forum say it is too early to tell if the Federal Insurance Office is off to a good start.

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P&C Industry Leaders Expect Better Profits in 2012: Survey

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