Analysis of the U.S. Property and Casualty Insurance Market

This Frost & Sullivan research service titled Analysis of the U.S. Property and Casualty Insurance Market provides an in-depth analysis of the market, covering industry challenges, market drivers, market restraints, investment themes, and financial highlights. The study covers the direct property and insurance market.

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Market Overview

The U.S. Property and Casualty Insurance Market Gains Traction in the Wake of Economic Turnaround

The growth in the property and casualty insurance market in the United States is expected to be driven by lower catastrophic losses, economic recovery, and better investment returns. Liability insurance and automobile insurance segments are likely to witness faster growth due to the upsurge in the number of personal liability lawsuits and accidents. Indicators of improving economic conditions such as new car sales, and declining business bankruptcies point to a positive outlook on the U.S. property and casualty insurance market. Increase in the number of new housing starts and ageing houses are expected to amplify market growth.

“A reduction in catastrophic losses in the short-term (1 to 2 years) is expected to immensely benefit the financial health of the property and casualty insurers,” notes the analyst of this research service. “There is also a demand for the federal government to play a larger role in financing catastrophic losses.” Rating agency Fitch has revised its sector outlook on the U.S. property and casualty insurance industry to stable from negative for both the commercial lines as well as personal lines sectors.

Market Participants Must Offer Products Aligned with Changing Investment Climate

Although the U.S. property and casualty insurance market is gaining steady traction, there are some factors stalling its forward momentum. Evidence points to downward pricing pressure due to lower business profitability. The rise in the number of foreclosures of insurance policies, decreased premiums, and increased claim costs are impacting the profitability of the market.

The Dodd–Frank Wall Street Reform and Consumer Protection Act was introduced in the United States in July 2010. According to the law, the Federal Insurance Office that would be responsible for insurance oversight will be established at the Treasury. Different state regulations in the subject matter of insurance had given rise to inefficiencies and anomalies in the past. These can be addressed by the Federal Insurance Office. “This bill is expected to bring greater transparency and efficiency to the insurance industry in the United States,” says the analyst. “However, the cost of compliance is likely to increase slightly.” The U.S. property and casualty insurers are required to adapt and create new products in sync with the evolving investment climate.

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