Advisen: Recession Affecting Both Supply and Demand for Insurance Coverage

Advisen: Recession Affecting Both Supply and Demand for Insurance Coverage

Advisen:
Recession Affecting Both Supply and Demand for Insurance Coverage
April 2, 2009

Excerpts:

Commercial insurance follows a boom-and-bust pricing cycle that generally thought to be largely uncorrelated with broader economic cycles. But according to a new report released by Advisen Ltd., the current recession is different. The severity of the economic crisis will adversely impact both the top lines and bottom lines of commercial insurers, making for a turbulent 2009, researchers for Advisen say.

"While past recessions have influenced insurance pricing, no recession since World War II has influenced both supply and demand so profoundly," said David Bradford, Advisen's executive vice president and chief knowledge officer. "Hard market conditions eventually will provide insurers and brokers some relief, but we see absolute top line income declining through 2009."

"The economic crisis will cause exposure units to shrink, businesses to fail, and will force companies to consider budget-cutting measures such as higher retentions and lower limits. This falloff in demand will result in a top-line premium decline across the industry, substantially offsetting gains from higher rates," Advisen stated in a release.

Read Full Article: http://www.insurancejournal.com/news/national/2009/04/02/99278.htm

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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.