Insurers post record profits, but see the darkness
Businesses, the Americans with their homeowners and auto insurance from a record 44. $ 8 billion profit last year, even after the accounts for the rights of policyholders, dashed by Hurricane Katrina and other major storms of 2005, according to the company “With the demands of regulatory authorities’ Status.
Top executives described the profit - 18 7 percent more than the previous year - a stroke of luck, the product of gains in other lines alongside insurance and homeowners a very good year for their investments.
You also said the increase, insurers face big problems, could only by a premium increases, a reduction commitments by several companies of most disasters parts of the country and, according to some, a significant step forward for the role of the State and Federal Governments in the insurance against those most major disasters.
“Unless insurers can relief, you’ll see a withdrawal of the private economy,” warned Robert P. Hartwig, chief economist at the industryfunded Insurance Information Institute.
“We are not good administrators investors in our capital or our policyholders’ surplus if we keep doing business where we can not make money.” Indeed, Property Casualty insurance sector, owners Home and auto-coverage, a sum to pay, while tens of billions of dollars of insurance in the wake of Katrina, although the largest insured catastrophe in the history of USA and a number of Certain ‘ other storms.
In addition to the increase in profits, the industry has increased its surplus by more than 7 percent to nearly 427 billion dollars, according to an analysis of the company, applications for registration of the National Association of Insurance Commissioners that the regulatory authorities of 50 countries. The surplus must be a financial cushion in times of high requirements.
The industry is virtually all its claims and charges premiums earned during the year with surplus by organising the analysis. The ratio of claims and expenses to premiums among the lowest in three decades.
The question is: how to produce in one year, an estimated $ 56. 8 billion in losses areas disaster, nearly two times higher than the current record, and more than twice what insurers paid after 11 September 2001, attacks, is this possible?
The answer, in part, is that insurers bought the USA during the catastrophe of their own insurance before the storms of 2005, many of whom from abroad. Senior staff said that half - and some estimates, nearly two thirds - the insured losses resulting from the hurricane will be ultimately be borne by the so-called reinsurers, many, headquartered in Bermuda and in Europe.
It is partly because of what Hartwig called the “anomaly” of most of the storm of 2005 are the flood damage, private insurers, not handles Washington on the national flood insurance.
But the remarkable industry also reflects a dozen years of effort by insurers to isolate the extremists financial consequences of the disaster, among others, the risk of relocation of businesses once vis-à-vis policyholders and the public.
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