Research Shows Mutual Insurers Poised for Increased Competition in Soft Market
According to a new study by Conning Research & Consulting, mutual property/casualty insurers are likely to face increased competition over the next few years due to overall capital buildup in the insurance industry, but they are well positioned to compete.
“Property/casualty insurers are coming off five years of strong operating performance and capital buildup,” said Stephan Christiansen, director of research at Conning Research. “While mutual insurers should be happy about that strong foundation, stock companies may be particularly pressured to seek profitable revenue growth to maintain an acceptable return on capital. That can lead to increasing competition for new business, which in turn can pressure pricing.”
The Conning Research study, “Property/Casualty Mutuals: Managing through the Softening Cycle,” identifies the strategic differences between stock and mutual companies in the industry and analyzes how that may affect the softening cycle.
“Emerging price softening may be made worse if the country goes into recession, and a return to catastrophes and increasing casualty frequency may challenge capital resources of some companies,” said Christiansen. “But there is much that mutuals can do to prepare and respond. Turning more focus towards policyholder retention is the best solution for both the increased competition and the softening price cycle. In addition, anticipating future capital needs may be prudent now, while profitability is still strong.”
“Property/Casualty Mutuals: Managing through the Softening Cycle” is available for purchase from Conning Research & Consulting, by calling (888) 707-1177 or by visiting the company’s website at www.conningresearch.com.
Source: Source: NAMIC | Published on March 5, 2008
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