High prevalence of catastrophe losses in 2011 leads to diminished returns for insurers

Posted on: Thursday, April 19, 2012

While there were plenty of insurance leads for insurance agents in 2011, a new study suggests providers' profitability shrunk.

According to the ISO, Property Casualty Insurers Association of America and the Insurance Information Institute, private property insurers' net income last year diminished to $19 billion, down significantly from 2010 when they earned in excess of $35 billion.

Part of the reason for the drop in earnings related to insurers' overall rate of return, as losses in underwriting increased to $36.5 billion from $10.5 billion in the previous year. These losses were largely driven by loss adjustment expenses from catastrophes, which rose to $38 billion in 2011 from $14.3 billion in 2010.

Even though there was a decline in earnings, Robert Gordon, senior vice president for PCI, said insurers are in a financially sustainable position.

"Despite the most active and deadliest tornado season in more than half a century and a host of other challenges, insurers emerged from 2011 strong, well capitalized, and capable of paying future claims," said Gordon.

Posted In: Insurance News, Property & Casualty Insurance

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