Moody's Investors Service says the U.S. property and casualty personal-lines sector remains stable despite expected Hurricane Sandy losses.

“We expect that losses from Hurricane Sandy will not jeopardize capital for major property and casualty insurers, although it will weaken 2012 earnings,” says Enrico Leo, Moody's assistant vice president and author of the report, “U.S. Personal Lines Industry Outlook Remains Stable.”

The personal lines insurance sector credit profile will be driven by insurers' focus on price adequacy in light of rising loss-cost trends, Moody's says.

Automobile rate increases are expected to outpace higher liability loss-cost trends and help offset low re-investment rates, alleviating operating-margin pressure.

Sandy will likely spur additional rate increases and other underwriting actions, Moody's projects.

Homeowners insurers had already been instituting rate increases, applying tighter underwriting standards and adjusting reinsurance programs in response to record high-frequency, low-severity weather-related events in 2011.

The industry is focused on policy retention, notes Moody's, as renewal business continues to be more profitable than new business.

Moody's says that new products such as usage-based insurance also have the potential to allow insurers to differentiate themselves with a competitive advantage. But insurers will have to tread carefully through challenges such as customer acceptance, start-up costs and regulatory approval, Moody's notes.

This article was originally posted at PropertyCasualty360.com, a sister site of Credit Union Times.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
  • Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Credit Union Management