Weiss Ratings has released its analysis of the P&C industry’s 2005 results; it will come as no surprise that results are down due to hurricanes and related disasters.
For those unfamiliar with the industry’s risk structure, here’s a quick snapshot. Primary insurers, such as Allstate and USAA, sell the policies and usually reinsure some portion of the potential losses with another insurance company. Thus, when big claims, or lots of claims, hit, the reinsurers get hammered.
Such was the case in 2005. Although the number and size of claims were high, reinsurers picked up a big chunk of the losses.
And, insurance companies did a pretty good job of investing premiums and therefore gained substantial returns on those assets. As a result, despite underwriting losses of $4.2 billion, on the whole the industry earned $46.7 billion, up 13% from the prior year.
The entire industry has just over half a trillion dollars in surplus available to pay claims. So, even if a major disaster hits, we should be OK.
What does this mean for you?
With reinsurance rates going up and coverage harder to obtain, expect to see the market continue to waver between hard and soft as underwriters wait for the hurricane season.
Apr
19
This is not a comment on your article except to say it was very informative. My problem is the following:
Health insurance paperwork is enought to put any patient back in the hospital. Every health care provider has their own format for their charges and bills, and that goes for ins. cos. The patient is confronted with paperwork up their cazoos. Do you know of any blog that relates to this problem? thanks.