Most insurance industry analysts predict slower property and casualty insurance premium growth for 2007, said Robert Hartwig, president and chief economist of the Insurance Information Institute.
Because the industry was able to rebound from catastrophic losses in 2006 and because all other major lines of P&C insurance have been performing well, Hartwig believes the industry will record its best underwriting performance in more than 70 years. "This apparent paradox—a peak in industry profits but stalling premium growth—is a clear reminder of the cyclical nature of the property/casualty business, and the fact that the industry's financial fortunes are influenced by a number of factors," he said.
Insurance companies are exerting a great deal of effort to minimize the future risk of catastrophic loss—for example, most have begun to limit or eliminate coverage of homes in hurricane-prone Florida. "With rapid coastal development, $40 billion-plus storms are expected to become more common, and many within the industry expect a $100 billion year in the not too distant future," Hartwig said.