Fitch says overall insurance industry is “pretty stable” despite contrary conditions

Opportunities are emerging in providing protection for cyber risk and supply chain risk

Fitch says overall insurance industry is “pretty stable” despite contrary conditions

Insurance News

By Allie Sanchez

Ratings and analyst firm Fitch Ratings said in a recent report that the current contrary conditions prevailing in the insurance industry will not harden the market going into 2017.

Fitch managing director and head of US property and casualty Jim Auden said that while current stability and underwriting profits are giving way to loss trends and diminishing profits, there are still sweet spots in the industry.

According to the agency, the industry is expected to go from an underwriting breakeven in 2016 to a slight underwriting loss this year. Return on surplus will dwindle from 6.6% in 2016 to around 5% in 2017. However, Mr. Auden believes that these trends will not cause a pricing shift or hardening market.

Auden also noted that growth opportunities are emerging in the cyber risk and supply chain risk sectors.

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However, Fitch added that the personal and commercial auto insurance markets “are struggling due to frequency and severity of claims.” Specifically for commercial auto, Auden explained that new technologies installed in cars are resulting in higher losses for carriers. The sector is also seeing higher litigation expenses, which is jacking up the rates, he added.

While workers’ compensation fared fairly well in 2016, the executive said that inflation, “deteriorating” prices and higher medical costs are likely to have an impact on claims in the near term.

Still, Fitch said its outlook for the industry is “pretty stable” based largely on the industry’s “capital strength” and “balance sheet quality.”

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