Insurance Companies Strategy of Slashing Premium Hurting Profitability

As a result of the insurance companies continued march towards gaining a competitive edge on each other, and gaining market share, they are starting to show both a loss of income and underwriting losses. As in all the previous cycles when the industry is mired in a "soft market", the industry is entering the next phase whereby profits are starting to decline due to their price cutting and lackadaisical approach to underwriting. Instead of taking a long term view and pricing their product appropriately, they continue along the same well trod path as they have for what seems like eons. While this soft market benefits the consumer while we're in it, the consumer will suffer when the industry makes it's standard correction by increasing pricing and enacting tougher underwriting. This of course hits you in the wallet and also increases the difficulty in obtaining insurance for those with spotty loss histories. Please click on title for more in depth information on this.

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