Government Reaps Benefit of P/C Insurers’ Excess Profits

The property/casualty insurance industry reported unexpectedly robust profits in the latest quarter, surpassing all estimates of Wall Street analysts. Gross profits were up more than $50 billion, which meant tax revenues to the federal government exceeded $220 billion.

Insurance company chief executive officers quickly took credit for the phenomenon so that underwriters and claims personnel could not.

“This is the evidence that we needed to see to determine once and for all that the hard market has returned,” said an industry spokesperson who preferred to remain anonymous because he has made this same statement in the past. “Risks are being appropriately priced and competition is now based upon capacity, capability and commitment rather than cost. Although we should not expect future results to remain in line with this remarkable turnaround, neither we should dismiss the operating results that have pushed the P/C industry into the black.”

The Internal Revenue Service said it is very excited and ready to help facilitate tax payments.

“If insurers do not wish to wire transfer their tax payments or overnight a check, we are willing to meet them more than half way. Specifically, we have made arrangements to have bonded couriers meet the chief financial officers at the location of their choice so we can pick up the tax payments in person. After all, we are from the government and we are here to help,” the IRS said.

Not everyone was ecstatic at the news. True to his profession as an actuary, Joseph L. Petrelli, president, Demotech, told Insurance Journal that “all of this would be appreciably more fun to discuss if the P/C insurance industry had booked any reserves whatsoever for Incurred But Not Reported losses. Although I am pleased that the industry believes that it has turned the corner and the worst is behind it, it would have been preferable to do so when booking reserves for reported claims only.”

An unidentified agent who overheard Petrelli’s comments called Insurance Journal to request a delay in publishing the story. “I want to cash my contingent commission bonus check,” she said.

Topics Carriers Profit Loss Excess Surplus Market Property Casualty