The property & casualty insurers that thrive in the post-11 September risk environment will possess "unquestionable financial strength and a strong commitment to conservative fundamental insurance practices", Insurance ratings agency AM Best has said.
In its 2001 Review/Preview report on the US property & casualty insurance industry, the agency said 11 September had forever changed the way the insurance industry defined risk.
It added that this meant new ways of pricing risk, and limited the ability of primary insurers to change pricing and coverage terms.
In addition, equity markets had become directly correlated with insurance losses, it said.
"Efforts to create an industry-wide solution to the new threat of terrorism foreshadow an acceleration of commercial lines deregulation, financial services convergence and the integration of insurance with capital markets," AM Best said.
"Against the backdrop of weak financial trends, this new risk environment has accelerated the hardening of the US property/casualty market."
The agency said sound operating fundamentals were enabling successful insurers to effectively manage the inevitable underwriting cycle.
"Ultimately, these front-runners are better positioned to capitalize on renewed flight-to-quality trends and benefit from the hardening market.
"Those with higher-quality books of business and stronger balance sheets will outperform the industry when the soft market returns," it said.
The Review/Preview report is available from www.bestweek.com.
