US p/c 'could get back in black'.

(From Insurance Day)

Byline: Peta Miller

US property/casualty (p/c) insurers could make their first underwriting profit in 2003, for 25 years, according to an expert assessing first-quarter performance.

But worrying trends in claims frequency and severity need attention if underwriting performance is not to slide, warned Robert Hartwig, senior vice-president and chief economist at the Insurance Information Institute, as he commented on the p/c industry's Q1 results.

"Continued strong premium growth, 'normal' catastrophe activity for the remainder of the year and a reduction in the number of massive year-end reserve charges could just maybe be enough to push the industry's underwriting result into the black for the first time in 25 years," Mr Hartwig ventured.

But he added given the disconcertingly high 10.7% increase in incurred losses and loss-adjustment expenses in a slow-growth, low-inflation economy, "there are still underlying problems with claims frequency and severity in many lines of insurance that need to be addressed. If premium growth rates taper off, as is widely expected, the industry's underwriting performance will once again deteriorate".

Most signs from the first quarter of the year are encouraging. The p/c industry's statutory rate of return was up at 8.8%, from 1% last year, and from its nadir of minus 2.4% in 2001, according to results compiled by the Insurance Services Office and the National Association of Independent Insurers.