Michael R. Murray, ISO’s assistant vice president for financial analysis, says that as regards returns for property and casualty insurance company for 2008, the overall results indicate a picture of an industry standing firmly on many fronts, in the face of adversity. He notes that the incredible financial upheaval that hit the insurance industry during the third quarter of 2008 went on without interference during the fourth quarter. This occurred as the downturn in the economy continued to gain momentum and while the various financial markets were stumbling. Nevertheless with the exception of some problems that are occurring in the mortgage and financial guaranty sector, Murray claims that the property and casualty insurance industry has gotten through intact. He says that one should not be mistaken that this year the insurance industry is suffering greatly from the economic downturn. He says that if it were not for the net loss suffered by the industry during the year 2001 due to the attack on the World Trade Center, net income for the industry in 2008 would have been the lowest during more than two decades. The 0.5 percent rate of return experienced by insurers for 2008 represents the second-lowest full-year rate of return since the start of ISO’s annual data reporting for the year of 1959, and is actually 8.7 percentage points below the average 50 year rate of return for insurers of 9.2 percent.
Property Casualty Insurers Association of America (PCI) president and chief executive officer, David Sampson notes that most property and casualty insurers as a group, remained profitable during 2008, completing the year with more than a trillion dollars on hand to make payment of claims. He sees this as being an outstanding testament to their risk management and conservative approach. He goes on to compare the insurance industry to Wall Street and says that the banks and Wall Street icons brought down by the financial crisis differ from property and casualty insurers which have up until now been able to continue servicing policyholders without interpretation and without having to turn to the government for a handout. He also points out that rather than being a broaden to taxpayers, it is the property and casualty insurers who are paying taxes, providing jobs, and contributing to local the economies through their purchasing of state and municipal bonds being used to finance so many important projects. Sampson also notes that even in these trying times, the property and casualty carriers are playing crucial role in helping consumers to obtain the financing they need to buy homes and automobiles, and that this is even in addition to the many businesses that would have had to shut down if they were not able to get workers compensation, liability, or property insurance.
Tags: Insurance News