Confidence in the ability of insurers to increase margins and grow premiums has slipped over the last year.[@@]
That message emerged from the results of an informal poll of about 140 executives who attended an insurance industry conference organized by the New York office of KPMG L.L.P.
KPMG used an electronic instant polling system to gather the results.
- None of the participating attendees said the industry’s ability to increase margins is strong. Although 65% said that ability is moderate, 35% said it is weak. In 2003, 11% thought the industry’s ability to increase margins was strong and 57% said it was moderate.
- Confidence in life and health insurers’ ability to generate premium growth also softened, with the percentage predicting that premiums will increase falling to 48%, from 58% in 2003. On the property-casualty side, the percentage of participants expecting premium growth fell to 43%, from 65%.
- Fear of technology waxed and fear of bad bonds waned. The percentage of participants who cited “credit risk” as the greatest threat facing the insurance industry fell to 8.5%, from 19%, and the percentage who cited technology as the greatest threat increased to 12%, from 3%.
- Hope for technology burned brighter as faith in distribution ebbed. The percentage of participants who said distribution would contribute most to future industry growth fell to 18%, from 30%, as the percentage who said technology would be the biggest driver of future growth increased to 14%, from 6%.
- The Sarbanes-Oxley Act of 2002 is having a noticeable effect on insurance executives’views. More than 83% now say SOX will have a big effect on the industry, up from 58%.