New challenges in growth, price competition to make repeat of a strong 2013 unlikely: U.S. insurance execs

Property and casualty insurers in the United States will be hard-pressed to repeat the industry’s stellar performance in 2013, suggested industry chief executives taking part in a Jan. 14 panel discussion at the Insurance Information Institute’s (III) 18th Annual Property/Casualty Insurance Joint Industry Forum in New York.

Executives reported that the confluence of higher rates, fewer-than-normal catastrophes and strong stock market returns in 2013 is not expected to be repeated in 2014, notes an III statement issued Thursday.

Many commercial insurance buyers are enjoying above-average earnings, Peter Hancock, CEO of AIG’s global property-casualty business, said during the panel discussion. “Their high profits will make them more likely to self-insure in the coming year, taking business from traditional insurers,” Hancock suggested.

There were two one-in-1,000 events in 2013 – flooding in the Colorado mountains and severe hailstorms in Germany, Franklin Montross, CEO of General Re, said at the forum. “But those, as well as the biggest recorded typhoon in history — Super Typhoon Haiyan in the Philippines — didn’t generate large insured losses,” Montross pointed out, adding that relatively few of the losses were insured.

The III statement notes that 2013 results were also buoyed by reductions of loss estimates from claims two or more years ago. That continued a trend over the past several years, but panelists agreed the trend is ready to peter out.

The executives suggested that 2014 will present new challenges, with growth being an important one. “The industry’s surplus is growing, with the increase in capacity possibly leading to increasing competitiveness on coverage terms and conditions,” the III statement says.

Chances for a good year will depend on the economy, with several panelists noting that most parts of the economy seem to be picking up. This would create more exposures for the industry to cover, the statement adds.

Kishore Ponnavolu, president of MetLife Auto & Home, however, offered a caution. “We’ve made a very nice recovery over the past couple of years,” Ponnavolu said, “but that only brings the economy back to where it was in 2008.”