Moving Forward

One result of an improving economy is increased demand for commercial insurance coverages.

The economy is improving, slowly. And the property/casualty insurance industry is seeing growth, as well.

Don’t take my word for it. According to Dr. Robert Hartwig, president of the Insurance Information Institute, P/C insurance industry exposures are growing modestly. “And modestly is a good term here because we haven’t had much P&C insurance growth since about 2005 or so,” Hartwig said at an industry symposium held by the Insurance Council of Texas in July.

In 2012, growth “in terms of premium written will be the strongest since 2004, 2005, probably not quite reaching 4 percent,” Hartwig explained.

“The reality is that the industry underwriting results are not that bad by historical standards,” he added.

So, if anyone out there is hoping for a traditional hard market, don’t count on it just yet. Capacity is up, Hartwig said. In fact, the P/C insurance industry “will hit several additional new records in terms of capacity in this business by the end of the year and that makes it tough to have a traditional hard market.”

As for the economy as a whole, while the country is not adding jobs as robustly as everyone would like, hiring is occurring and it’s happening in the private sector, Hartwig noted.

“Increasing private sector hiring is driving workers’ comp payrolls,” he said. “Instead of 80,000 jobs we’d like to have 180,000 jobs but it is moving in a positive direction. In fact you may not realize it but … payroll exposure today is higher than it was prior to the economic downturn.”

An improving economy and even a slight uptick in hiring means increased demand for commercial insurance coverages, with workers’ compensation leading the way. Some property and liability coverages are beginning to pick up as well, Hartwig said.

There are at least 12 commercial sectors that are growing and are expected to continue growing over the next decade.

These are areas that agents and brokers might want to learn more about, according to both Hartwig and Don Harrell, senior vice president, Marine, at Liberty International Underwriters. Growth areas include: health care; health sciences; energy (traditional); alternative energy; petrochemical; agriculture; natural resources; technology (including bio technology); light manufacturing; insourced manufacturing; export-oriented industries; and shipping (rail, marine, trucking). (See more about economic recovery and its effect on commercial insurance coverages beginning on page 20.)

Obviously, the country has a long way to go to get the economy fully back on track, but at least it’s moving forward. Really.