Personal Lines are doing Fine with Dramatic Changes in 2005 

Despite higher rates or lower settlement costs, insurers are still doing reasonably well. While 2005 was a pretty good year for insurers, 2006 looks even better.

Brian Sullivan, publisher of Property Insurance Report and Auto Insurance Report, noted that in 2005, insurers were “in a tough spot”. He believes that they couldn’t grow by cutting prices, so he suggested not doing anything.

From this point forward, insurers decided to continue making money. A poll of analysts claimed that there should be yet a further underwriting profit in the year of 2006, with a ratio of 99. In fact, there are already predictions that there will be a return for the property casualty industry in 2006 by 15%.

Dowling & Partners Securities LLC, in Hartford, specialize in property casualty stocks. V.J. Dowling, a stock analyst in Dowling & Partners, claimed that personal lines, especially auto, are still a pretty good place for insurers.

 Auto is having returns of 15 percent only because accident frequency is lower than before. Dowling stated that as long as this continues to happen, results will be a lot stronger than expected, however, at some point, accident frequency will rise.

An analyst warned that even though companies have indeed stopped lowering personal lines prices, this does not indicate that their “cycle” is not working. David Schiff, an editor of Schiff’s Insurance Observer, said that “the key is not to get too intoxicated by the good times”. I guess he means that obsessing over the times that brought the most profit isn’t recommended. While 2005 wasn’t a good year for the citizens of America, personal lines and insurers continue making profit. To this day, insurers can enlarge by simply winning over weaker competition that has a lack of market presence and a deficient in skills.