Overall, the insurance markets are very strong, with record capital and record policyholder surplus, but there are several troubling trends in the market. Combined ratios and loss trends are deteriorating, and policyholder surplus is growing at a rate slower than the GDP. Robert Gordon, SVP – PCI Policy Development and Research, sees a “tale of two cities” with commercial lines being profitable at the moment and personal lines experiencing spikes in loss costs affecting results in the short-term, particularly in auto lines.

Mr. Gordon says the rising cost issues are at the top of PCI’s agenda, along with potential regulatory over-reach. He points to recent research conducted with the Ward Group that suggest compliance and regulatory costs have increased 19 percent over the past two years. PCI is also concerned about movements toward one-size-fits-all global standards.  PCI is calling on Congress to promote more international transparency with regard to compliance discussions. He says the Federal Reserve Board and Federal Insurance Office (FIO) now agree that Solvency II might be good for Europe, but it is not good for the U.S. domestic market.

The 2016 Presidential election will be very consequential for the insurance industry. A Democratic Congress would force the industry to go from “playing offense to playing defense” with more “hostile oversight.” He notes that the Supreme Court would likely shift to a Liberal majority, which could reverse trends on limits to regulatory over-reach.”

For more of our coverage of the Annual PCI Meeting, visit the WRIN.tv On Demand Library.

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