Personal Lines See New Growth Tactics

Personal Lines See New Growth Tactics

Personal lines market leaders are employing a new mix of tactics as they compete for growth, according to a new Conning report, "Conning's Property-Casualty Industry Insights."

"Personal lines leaders are more aware now than the last cycle of the price points that damage profits," said Conning Research & Consulting Inc. analyst Bruce Hale in a statement.

While modest price cuts are common in the personal automobile line, the homeowners line is showing flat-to-minimal rate increases in most states.

"These measured actions are affordable for insurers because of recent strong profits," Mr. Hale said.

Earlier this year, the U.S. property-casualty industry showed its first underwriting profit since 1978, which combined with increases in capital gains led to a 29 percent rise in net income, according to the Insurance Services Office.

Stephan Christiansen, director of research at Conning, said that although the industry is not engaged in its traditional "self-inflicted" erosion of profits, there are some long-term threats on the horizon.

One of these threats is to the use of credit scoring by insurers in personal lines insurance underwriting. While the practice has gained more and more acceptance, the final test will come later this year when the Federal Trade Commission releases the results of its studies on the use of credit scoring.

"We will see whether the study will affirm this core element of predictive modeling, or lead to operational disruptions," Mr. Christiansen said.

Analysts have predicted that those companies with the most sophisticated tiering strategies will gain the upper market hand in the coming years with their ability to match price to risk. And credit scoring will play a big role in that strategy.

Additional information on the study is available by visiting the Web site at www.conningreserach.com.