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Taking the pulse of insurance carriers in early 2016
/ Categories: Trends

Taking the pulse of insurance carriers in early 2016

Every quarter, A.M. Best takes the insurance industry pulse to get a read on various issues and topics, from market health to current trends. Last week, they released the A.M. Best’s Winter 2015/2016 Insurance Industry Survey.  

According to the A.M. Best press release, the survey represented several hundred responses from U.S. insurance companies, with the following breakdown:

Property/casualty - 70.4%
Life/annuity - 22.2%
Health - 5.3%
Various - 2.1%  (surety, reinsurance, credit and term or title insurance companies)

Survey highlights include the following:

  • Nearly half of the P/C sector (48.0%) anticipates a return on equity of 7% or less, compared with 33.3% of L/A companies. Overall, half of total respondents expect returns between 8% and 13;
  • The survey asked insurers to vote on the most-used word or phrase they encountered in 2015. “Cyber risk” was the most popular answer, capturing 31% of all responses. Low interest rate environment came in second at 29.9%;
  • Just 5.4% of respondents felt that economic conditions would improve in 2016. Almost 46% of respondents indicated conditions would remain stable, while 30.4% believed that conditions would deteriorate;
  • Less than half of the responding insurers reported using predictive analytics (48.9%). Those companies that reported using predictive analytics cited underwriting (82.2%), claims (39.7%) and strategy (24.7%) as their major areas of focus;
  • Just under 30% of respondents believe that the main driver of industry M&A activity in 2016 will be for strategic use of excess capital;
  • More than half of the respondents see economic events (22.6%), capital markets (14.5%) and political events (13.4%) as leading disruptors for the next five years
  • Donald Trump is the most-favored presidential candidate in the 2016 election, according to 26.5% of P/C respondents and 26.7% of life/health respondents.
The full survey is available here if you have a subscription

You can also access an analysis of the report and more detail by Phil Gusman at PropertyCasualty360: What insurers expect in 2016, according to A.M. Best survey.

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