Insurance Companies Earnings Getting Walloped

Well, what now insurance companies? Rates have been so low for so long and underwriting has not really been underwriting, that sooner or later the piper had to be paid.. Well the piper has started to collect as insurers earnings have decreased significantly and combined ratios are climbing. The industry has used Wall Street and timing of claim payouts to make up for under priced insurance. However this cannot save the companies this time and underwriting discipline has to come back in vogue. The market has to adjust to get back to the core discipline of making money on underwriting. If it does not and the competitive marketplace stays as agressive as it has been,  then the industry will be changed forever. More consolidations will occur in the company world and also in the broker/agent world because organic growth will be almost impossible. Heck, it is only 1-3% now, that certainly is not a percentage range to build a business on. The industry is at a cross roads of change. Either a change that will resemble the textbook description of how to run a insurance company, or a new paradigm that rewrites the book. Let's see how it plays out. Until next time be careful out there and know your risks. K

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