Wednesday September 9, 2009

A report just issued by Keefe Bruyette & Woods from the Monte Carlo Rendez-Vous should be required reading for every insurance executive.  The report summarizes the concerns being expressed among the major reinsurance players that US casualty rates are falling during a period of low interest rates and with the spectre of higher inflation on the horizon.  Apparently many reinsurance market participants believe that the primary casualty market in the US is underpriced with price competition accelerating.

In one of my earlier posts I reinterated the concerns raised by Dr. Robert Hartwig of the Insurance Information Institute about the need to a return to fundamental underwriting because of low interest yields.  He also expressed a cautionary note about inflation and the impact on reserve development.  Apparently he is not the only one that thinks the US casaulty market lacks discipline.  This also comes at a time when many primary carriers are still strugglinig to rebuild risk based capital ratios severely depleted due to investment losses in 2008.

Will the US insurance market ever learn?

 

» Posted by John M. Foehl, Jr. at 8:31 AM