The property and casualty insurance industry has reported after-tax profits of $44.9 billion for the first nine months of 2006, up 50.1% from a year earlier. If this path continues for the last three months of the year, it "would lead insurers to their best financial performance in nearly 20 years," according to the Insurance Information Institute.
"Strong underwriting results are being reported in virtually every key line of insurance" including comp and auto insurance.
What is most interesting is that the combined ratio is down to 91.5, down from 99.8 for the same nine-month period in 2005. The "combined ratio" is the cost of paying and adjusting claims compared with premium income. A combined ration of 91.5 means that the industry paid out 91.5 cents for each dollar it collected in premiums. If the industry ends the year with a combined ratio at 91.5 it would be the best result in nearly 60 years.
The industry also makes significant money with its investments. Profits there were almost $40 billion. Interestingly, the industry has less than 17% of its portfolio in the stock market.
These results will not stop the efforts to restrict the right of consumers to the right of trial by jury. The successes the industry has had in previous years is working its way to the bottom line, and the industry will continue to press for more "reforms" that will improve predictability in a business that is all about risk assessment. Over the last 20 years the industry has made extraordinary efforts to shift the focus (and expense) of the pro-tort reform movement to industry, and with record profits like these you can expect that they will continue to do so.
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