Insurers predict positive results next year
THE U.S. commercial insurance industry will continue to see positive gains in 2016, according to a report published by Wells Fargo Insurance Services USA Inc.
The company’s 2016 Market Outlook report, released Tuesday, indicated that favorable losses across most insurance lines and a lack in catastrophe property claims will provide positive underwriting gains in 2016.
Some of the key findings in the report noted that gross domestic product was expected to continue to grow in 2016, though not as much as the previous two years, resulting in continued higher revenues, payrolls, and property values, which would be reflected in insurance premiums.
Higher investment returns from rising interest rates should give insurers higher investment returns as well, the report said.
The report found the insurance industry increasingly using data analysis to find loss trends, although it said it is not known if the data is being interpreted objectively or accurately.
The report stated the continuation of mergers and acquisitions in the insurance and reinsurance market made achieving profitable organic growth difficult.
“We expected M&A activity all along, but the magnitude of that activity, what with ACE-Chubb and XL-Catlin mergers, was much larger than we anticipated,” said Doug O’Brien, Wells Fargo’s New York-based casualty and alternative risk national practice leader.
“Certain markets will enter into new product lines, which can prolong a buyer’s market,” he said.
“I think it’s going to be more pronounced next year; as markets struggle to deploy their capacity, new product offerings and M&A are good for the marketplace,” he said.
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