Property/casualty insurers to see premium growth in 2013: Deloitte
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Property/casualty insurers will see premium growth in 2013, but ample challenges remain, says a report released Thursday by Deloitte L.L.P.
The report, “2013 Property/Casualty Insurance Industry Outlook,” said that the burgeoning economic recovery will translate into top-line growth for insurers as demand for insurance increases and premiums rise in the middle single-digits.
“The soft market for insurance may be over, but the hardening of the market is likely to remain modest,” the report states. “While premium rates and overall volume are both on track to rise this year, organic growth will not necessarily be quick — or high — enough to satisfy shareholders looking for a greater return on equity in a competitive capital market.”
Accordingly, insurance companies may look to merger and acquisitions to augment their organic growth, Deloitte predicts in the report.
“Major transformational deals in the U.S. are less likely than bolt-on acquisitions of additional distribution channels, business lines and geographic outlets, both here and outside the country,” the report states. “However, a rising stock market, improved pricing conditions and pent-up demand could prompt P&C insurers looking to broaden their scope to intensify M&A efforts, potentially driving up the volume and value of deals.”
Citing the responses from focus groups convened in the summer of 2012 on behalf of Deloitte's Center for Financial Services, the report also predicts that some commercial insurers will begin to alter their distribution models by sidestepping intermediaries and selling commercial policies direct to small businesses.
“These focus groups made clear that agents and brokers can no longer take it for granted that small businesses will continue to buy commercial insurance through an intermediary unless they can demonstrate the value they bring beyond marketing a risk and handling minor service issues,” the report states.
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