Rising rates and more disciplined underwriting have boosted the industry’s performance in recent years. Indeed, the industry turned in its first underwriting profit in more than a quarter century in 2004, and a similarly good year is expected in 2005, with a projected combined ratio of just 98.9.
But the industry’s effort to continue its recovery from its worst-ever performance in 2001 ran into high winds in 2004 as a quartet of hurricanes contributed to what turned out to be a record year in terms of catastrophe losses. Add to that the distraction of dozens of investigations by state attorneys general, insurance departments and the Securities and Exchange Commission and it’s clear that CEOs are suffering through more than a few sleepless nights.
- Concerns over the sustainability of profits
- Challenges to maintaining underwriting discipline
- The struggle to improve financial strength and ratings
- Tort reform efforts
- The urgent need for extension of the federal backstop for terrorism losses
- Concerns over the investigation of industry practices