The Insurance Marketplace

As we enter the final quarter of 2011, most insurers are probably looking forward to starting a new year with a clean slate. This has been be a disastrous year for insurers all over the world. So far only the figures for the first six months have been analyzed. Net income fell by 71% over the same period last year. In the first half of 2010, insurers recorded net income of $16.8 billion. In the comparable period this year, net income dropped to $4.8 billion.

Catastrophes striking the United States itself during the first half of 2011 caused $23 billion in direct insured losses. That damage is up from $14 billion in 2010 and well above the average $7.7 billion for the period over the past 10 years. Obviously the losses associated with Hurricane Irene and other more recent events will cause more red ink for insurers once the third quarter results are tallied.

Overall, however, the insurance industry remains well-capitalized. Most analysts expect only modest increases in premiums for low-risks clients who are not located in difficult underwriting regions. Between now and next April, insurers will be buying their own catastrophe reinsurance for 2012. Some observers believe that those renewing reinsurance premiums could increase significantly. If so, the higher costs could be passed onto retail insurance buyers during the latter part of next year. We will have a clearer picture of this scenario next spring.

In the meantime, our most recent corporate renewals are being negotiated at about the expiring premium when losses are within normal and expected ranges. We have seen some single digit increases on some lines, even when loss experience is good. Personal insurance renewals are under more pricing pressure and have seen larger increases depending on geographic location and claims experience.

As always, our ability to place coverage with multiple carriers assures that our clients will not automatically pay more, just because one underwriter or carrier says so.