Insurance Institute: 2005 to be first US underwriting profit since 1978
2004 would have been the best year for the US P&C industry “in decades” were it not the for the third quarter storms, but next year is set to become the first year to witness an underwriting profit since 1978.
These are the conclusions drawn from the Insurance Information Institute’s (III) annual “earlybird” forecasts based on a panel of Wall Street analysts and industry experts.
According to an average of the panel’s projections, 2005’s combined ratio will be 99 points, slightly down on the 100 points estimate for this year. The III also points out that if 2004 was a “normal” Cat loss year, then the combined ratio would have fallen to around 95 – the lowest since 1972.
According to the panel, growth in premiums income will slow next year while there was concern over pricing discipline.
The Institute noted that one of the industry’s “biggest disappointments” in 2004 was the failure of class action, asbestos and medical malpractice reform legislation.
“At a minimum,” continued the Institute: “Congress will likely revisit the issue of class action reform in 2005, which fell short of passage by a single vote in the Senate in 2004”. It added that the failure to get the Terrorism Risk Insurance Act extended in 2004 was “also a major disappointment”.