Negative trends in the US personal lines insurance industry could begin to reverse in 2002, Standard & Poor's (S&P) has said in a new report.
The report said examples of such trends included the deterioration in personal lines insurer's earnings, capitalisation, and pricing adequacy.
The report's author, S&P insurance ratings group director Charles Titterton, said: "In 2002, these unfavorable trends could begin to reverse, as a substantial and growing segment of companies have seen enough deterioration of their capital positions that their managements could soon decide that they must hold the line on price or even increase pricing, even at the cost of a considerable reduction in persistency and market share.
"Such collective decision-making could increase demand for the remaining participants to the point where they can begin to raise price above cost trends."
The report, "Personal Lines Outlook 2002: Benefits of Market Turnaround Diminished By Continued Heavy Competition", identifies the key trends that will shape the personal line segment of the US property/casualty industry in 2002.
Unlike their commercial lines counterparts, personal lines insurers were almost completely unaffected by the 11 September terrorist attacks. However, the industry has had problems of its own to contend with, the report said.
It added that although times were very good for most personal lines insurers in the early and mid 1990s, since 1998 the personal lines sector had experienced steady deterioration in earnings, capitalization, and pricing adequacy.
