Study: auto insurance market reaches maturity. (Marketplace: Property/Casualty).Personal automobile automobile, self-propelled vehicle used for travel on land. The term is commonly applied to a four-wheeled vehicle designed to carry two to six passengers and a limited amount of cargo, as contrasted with a truck, which is designed primarily for the transportation of insurers are operating under a "caution flag," with insurers unable to achieve necessary growth in premiums or get an adequate return on surplus, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a new study. Since 1993, auto insurers have only been able to bring their combined ratio below 100 in one year--1997--and that was a mere 99.8, according to the study from Conning Research & Consulting Inc. Personal auto insurers will see disappointing financial results over the next five years, continuing the pattern dating back to 1993, the study said. The study, "Caution Flag for Personal Automobile Insurance," analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. the personal auto line over the past nine years against two benchmarks--growth of premium at least equal to that of the gross domestic product, and a return on surplus of 12%--and showed companies unable to achieve both benchmarks in the same year. "The issue is that insurance is a mature business," said Michael Weinstein Michael L. "Mikey" Weinstein is an attorney, businessman and former Air Force officer. He is founder and president of the Military Religious Freedom Foundation and author of With God on Our Side: One Man's War Against an Evangelical Coup in America's Military , director of research for Conning Research & Consulting. "For companies in this line of business, their earnings are their cost of capital as a business, which is what we would expect to find in a mature industry." The low return on surplus mainly reflects insufficient in·suf·fi·cient adj. 1. Not sufficient. 2. Incapable of proper functioning. progress in reducing expenses compared with other industries and low premium-to-surplus leverage, the study said. Factors preventing major changes in the industry in the near future include: * Loss levels threatened by medical inflation and slow deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of the driving environment, offset slightly by new safety features on new cars and light trucks; and * A delay in growth of Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the sales, which could provide improved expense ratios. Top 5 Private Passenger Auto, Top Writers--2001 Rank is based on 2001 direct premiums written. Rank Companies % Market Share 1 State Farm Group 19.0 2 Allstate Ins Group 11.3 3 Zurich/Farmers Group 5.7 4 Progressive Group 4.9 5 Nationwide Group 4.7 Source: A.M. Best Co. data |
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