Underwriting discipline and cost-structure management continue to be insurance executives' biggest concerns, but maintaining ratings has joined them as a critical issue, according to a survey Munich Reinsurance America Inc. released last week.

Sixty-three percent of participants in the “CEO Roundtable Survey 2011” cited maintaining underwriting discipline and price adequacy as a critical issue.

“That's the consistent No. 1 answer since we first started asking (the question) in 2003,” the first year of the survey, said Gregory Coda, president of national/broker clients at the Princeton, N.J.-based reinsurer.

In addition, 42% of the 150 respondents, who could choose multiple answers, cited managing their cost structure as a major concern.

Some 27% of insurance executives cited “maintaining your rating,” which “wasn't something they had ever even responded to” in past Munich Re surveys, Mr. Coda said.

Respondents included executives who did not attend Munich Re America's annual CEO Roundtable gathering as well as those who did. Previously, only CEO Roundtable attendees participated. The broader response this year “just helped reinforce the validity” of the survey, Mr. Coda said.

Respondents also were asked to indicate three areas where their company has a competitive advantage. The biggest percentage, 61%, cited underwriting capability; which was followed by strong capital position, cited by 48%; and claims processing and management, 46%.

Mr. Coda said for the first time this year, Munich Re asked respondents whether insurance technology is an area where companies needed to improve. Sixty percent indicated it was. Some 29% said improvement is needed in policy processing, while 28% cited marketing.

Last year, the top three areas insurance executive cited as needing improvement were marketing, 43%; strategic focus, 36%; and policy processing, 29%.

Asked to describe the financial outlook for their company during 2011-2012 compared with 2010-2011, 54% said it was the same.

Another new question Munich Re asked was whether price competition is one of the three most critical issues facing the primary insurance industry today, and 71% said it is. Second was poor economic conditions, cited by 58%; and low interest rates and capital market returns, cited by 30%. Last year, 69% of the respondents cited poor economic conditions, 55% chose low interest rates and 52% said claim cost inflation.

Factors rated as being among the top three critical issues in previous years that did not make the top three this year include natural catastrophes, the ability to file and use adequate rates due to state regulation, and restrictive state regulation.

Forty-four percent of the executives said they expect flat commercial rates over the next six months, while 23% said they expect rates to increase 1% to 4%. Five percent said they expect hikes of 5% to 10%, and 1% said they expect rates to increase more than 10%.

Another 22% said they expect commercial rates to decline 1% to 4%, and 5% anticipate declines of 5% to 10%.

Pointing to the sizable proportion that expect rates to be flat, Mr. Coda said, “Within the industry, it's a barometer for a general acceptance that this is the market environment that we're in.”

Participants also were also asked about anticipated merger and acquisition activity during 2011-2012 compared with the year-earlier period. Of 39% who identified themselves as an acquirer, 48% said they anticipate more activity, while 45% said it would be about the same. Among those who described themselves as a nonacquirer, 65% said they anticipate M&A activity will be about the same and 26% said they expect it to increase.

Asked to rank the priority order in which Congress needs to act on listed issues, general tax reform ranked first. Medical liability and health care reform tied for second, followed by federal regulation of insurance, federal “systemic risk” regulation of insurers and federal involvement in catastrophe risk management.