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Rate hikes to last two more years: Ernst & Young
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| Business Insurance Daily News 10/31/2002 - Rate hikes
for commercial property/casualty insurance will
continue for at least two more years, predicts Ernst &
Young L.L.P.
On average, commercial property/casualty rates are
rising by about 20% this year "with no signs of going
down," said Peter Porrino, global and Americas director
of insurance industry services for Ernst & Young, at
the company's Financial Services Outlook-2003 in New
York.
The industry's overall policyholder surplus has been
dropping since 1999, and further rate increases are
needed to push this level back up, he said. Insurers
will need to raise prices until combined ratios drop
significantly below the current level of about 105%, Mr
Porrino said.
"You're not making money at those levels," he said.
"You need a 90% combined ratio," Mr Porrino said. "and
I don't think this industry has had a 90% combined
ratio for more than a year at a time" and not once in
the past 15 years, he said.
Mr Porrino also said that despite doubts expressed in
some quarters, the proposed federal terrorism insurance
backstop will benefit insurers. In addition, he said,
as well as providing financial assistance, any such
federal law will lead to "a growing clamor for federal
regulation, and I'm not sure that's a bad thing at
all," he said. |
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