NEW YORK, January 19, 2016 — A panel of prominent property/casualty insurance executives forecast a challenging 2016, as the diminishing tailwinds of reserve releases struggle against headwinds of low interest rates.
The five senior executives gave their forecast and other market insights at the 20th annual Property/Casualty Joint Industry Forum, held here on January 12, in a session titled, A View from the Inside Looking Out, moderated by Robert P. Hartwig, president of the Insurance Information Institute (I.I.I.).
In recent years the industry has enjoyed steady growth—about 4 percent a year—and favorable underwriting results—a combined ratio of close to 98, noted Hartwig, who is also an economist. Panelists cautioned results could deteriorate.
Constantine P. (Dinos) Iordanou, chairman, president and chief executive officer of Arch Capital Group Ltd., said results had been buoyed by the favorable runoff of loss reserves from prior years. When actuaries change their estimates of losses incurred in previous years, it affects earnings in the current year. Industrywide, those estimates have been revised downward in recent years, but the favorable runoff is “scaling back,” with deficiencies emerging in some lines, Iordanou said. “What will carry the day is underwriting discipline and patience.”