Magazine article Risk Management

Hard Market Here to Stay. (Risk Reporter)

Magazine article Risk Management

Hard Market Here to Stay. (Risk Reporter)

Article excerpt

Risk managers who are struggling to keep up with the hardening insurance market have little to look forward to, according to the recently released Ernst & Young Financial Services Outlook 2003 report. In it, E&Y's Pete Porrino estimates that the hard commercial insurance market will last for at least another two years.

Property/casualty insurers are the only sector of the battered financial services industry that should be doing better, not worse, in the current business environment, Porrino says. Commercial rates are going up "with no end in sight," he explains, adding to the most significant P/C increases since the mid-1980s.

From 1988 through 1999, annual declines in commercial lines premiums averaged nearly ten percent. This prolonged soft market left the commercial insurance market underreserved by some $120 billion. "It's not that crazy, when you consider the low pricing in the '90s," Porrino says.

In addition, self-insurance, alternative risk transfer and the use of captives are all booming, and claims inflation is going up as well. …

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