Julian James, Lloyd’s director of worldwide markets, warned insurers that despite expected high profits in 2006 of up to $60 billion they should “embrace change.” Some of the warning signs
include:Weak premium growth of 2.9 percent for the first six months of the year, premium rates sliding downward, and industry surplus rising adding up to “’a pretty clear picture of stagnant demand and oversupply.’ Regulatory intervention—states, especially those in disaster-prone areas, are refusing to allow insurers to charge risk-based rates. He also noted signs pointing to a slowing U.S. economy, such as a decline in new home starts.
James went on “’to challenge the notion that ‘profit’ is a dirty word’ and to do a better job of explaining to policyholders, regulators and other key stakeholders how a solvent industry helps the world economy.”
Somehow I don’t think many people are going to understand or want to hear about a solvent industry and high insurance profits regardless of how great it may be for the world economy.
I'm astounded at the fact that many industries still think that they should be making steadily escalating profits, while their customers are settling for salary increases of 2-3% year over year. It seems to me that the increases in insurance profits are completely in line with what the market can bear, and expectations to the contrary are problematic. However, now that many insurers are becoming publically-traded stocks, we can expect the shareholders to continue to drive an inflated desire for profit. One can only hope that this isn't to the detriment of individuals who buy insurance in good faith, and expect to be treated fairly when it comes time to make a claim. Some insurers, in a desire to hold onto their money as long as possible, make the claims process as miserable as possible, and this should not be the an acceptable methodology for generating more profit.
Posted by: Monique Attinger | November 14, 2006 5:16 AM | Permalink to Comment