The nation’s property/casualty insurance executives are anticipating much of the same in 2016, according to a new survey conducted during the Insurance Information Institute’s Property/Casualty Insurance Joint Industry Forum in New York.
The poll of 80 executives reveals that the industry expects static premium growth – apart from cyber lines – and continued merger and acquisition activity among American carriers.
Politically, a slight majority of respondents (55%) say they think there will be a new Democrat headed for the White House following fall elections.
Significantly more (79%) believe US economic growth will remain the same this year, with only 16% believing it will accelerate in growth. That should positively affect the P/C industry, though modestly, said Dr. Steven Weisbart, senior vice president and chief economist with the III.
“The US economy appears to be growing slowly but steadily, which translates into more economic activity and the addition of capacity. Personal and commercial insurance will also grow as a result, assuming none of the many potential adverse economic shocks develop,” Weisbart said. “As the economy inches closer to full employment, we may begin to see wage increases that outpace inflation for the first time in nearly a decade, primarily affecting the workers’ compensation line.”
This follows in line with P/C executives’ expectations – 68% see no improvement in workers’ comp.
One area they do foresee growth is in cyber insurance. Seventy-six percent of executives said they see the line as a major growth area for carriers in 2016, counteracting an otherwise static market.
Overall, a slight majority of respondents (53%) believe premium growth will occur at the same rate in 2016 as it did in 2015. Only 29% of respondents believe it will grow faster, and 18% foresee a slower growth in premium.
Perhaps for those reasons, 55% say they expect a continued increase in merger and acquisition activity among carriers this year.
However, whether such transactions are successful depends on regulatory approval, and many P/C executives foresee a stricter regulatory environment in the months and years ahead. In fact, 87% say they believe the federal government is interested in further expanding its oversight of insurers, on top of the establishment of the Federal Insurance Office through the Dodd-Frank Act.
