The first viewpoint is a survey from the 2015 Joint Industry Forum held in New York a few weeks ago. It was conducted by the Insurance Information Institute (I.I.I.) who polled 250 insurance executives, and other insurance movers and shakers about insurance in 2015.
The survey questions that most impact you start with profitability. None of the executives from the I.I.I. investigation expect commercial lines, workers’ compensation, personal auto or homeowners to be more profitable in 2015.
The one line all expect to grow — and it may be a new profit source for your agency or for you if you are a solo operation — is cyber insurance. A staggering 80% of those surveyed said it will be a profit center in 2015.
Few expect premium growth to improve and a high percentage —92% — expect mergers and acquisitions to continue to increase.
The second look at 2015 comes from Keefe, Bruyette & Woods (KBW). Its analysts think operating profits for insurers will improve slightly in 2015. Speaking for the firm is Meyer Shields. He said workers’ compensation, a few casualty lines, general liability and commercial auto liability will see small increases but property lines will decline.
“There are a lot of insurance carriers and so it remains a very competitive marketplace. Companies believe they can earn an adequate return and still price competitively, which should drag down prices,” Shields said.
Here’s the I.I.I. survey.
Do you expect an improvement in profitability in 2015 for the following lines?
Personal auto: 39% 61%
Homeowners: 46% 54%
Workers compensation: 44% 56%
Commercial Lines: 42% 58%
As compared with 2014, do you expect the combined ratio will be higher or lower in 2015?
Higher — 74%
Lower — 26%
Will premium growth in 2015 be higher, lower or flat compared to 2014?
Higher — 36%
Lower — 18%
Flat — 46%
Do you expect industry capacity (as measured by policyholder surplus) to increase, decrease, or remain flat in 2015?
Increase — 78%
Decrease — 4%
Flat — 18%
Do you think the federal government is interested in further expanding its regulatory oversight of insurers?
Yes — 72%
No — 28%
Will M&A activity among insurers/reinsurers increase in 2015?
Yes — 92%
No — 8%
Will tort trends improve, deteriorate or remain about the same in 2015?
Improve — 16%
Deteriorate — 18%
Same — 66%
Do you see cyber insurance as a major growth area for commercial insurers?
Yes — 80%
No — 20%
Do you expect another up year in the equity markets in 2015?
Yes — 68%
No — 32%
Do you expect interest rates will rise, fall or remain flat in 2015?
Rise — 40%
Fall — 4%
Flat — 56%
Do you think the U.S. economic growth in 2015 accelerate, decelerate or remain about the same?
Accelerate — 56%
Decelerate — 6%
Same — 38%
Source links: Insurance Information Institute, Risk and Insurance