The last 24 months have been traumatic for the insurance industry but the profit picture for 2006 is quite good overall, according to Robert P. Hartwig, Insurance Information Institute senior vice president and chief economist.
Premium growth, however, is a current concern.
“Recapping last year vs. 2004, if there is one downside to what has happened recently it is that we have entered a period in which premium growth is basically grinding almost to a halt,” Hartwig told workers’ compensation executives attending the National Council on Compensation Insurance Annual Issues Symposium. he said industry-wide premium growth in 2005 slowed to about one-half of 1 percent.
The economist said the current period is very much like what happened after 1992, when the industry saw a boost in premium income which then fell off.
He pointed out that mutual companies are becoming more profitable, while stock companies seem to be pretty much holding their own.
But property casualty insurers are still falling far short of the Fortune 500 rate of return. Over the past decade the average return for all property casualty lines is 7.7 percent; for workers’ compensation, 7.9 percent.
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