Insurer 'Groundhogs' See Prices Heating Up In 2002

Insurer 'Groundhogs' See Prices Heating Up In 2002

Each year before Groundhog Day, we at the Insurance Information Institute ask a panel of Wall Street stock analysts and industry professionals to come out of their holes, look around for their shadow, and forecast the outlook for the industry.

Unlike Punxsutawney Phil, who this year predicted six more weeks of cold weather, most analysts expect premium growth to heat

up while the combined ratio begins to thaw following a very long winter of discontent.

The average forecast calls for an increase in net written premiums of 14.7 percent in 2002, resulting from a combination of increased prices and higher demand. If realized, the industry will grow at its fastest pace since 1986.

The combined ratio for this year is projected to be 108.1, down dramatically from an estimated 117.7 in 2001. If realized, the industry will see its first decline in the combined ratio since 1997. However, the estimate assumes no major insured losses from terrorist acts in 2002 as well as “normal” catastrophe activity.

The expected improvement in 2002 underwriting results reflects a better balance between the price of insurance premiums and the increased risk of the post-Sept. 11 environment.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 18, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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