Insurance premiums are soaring. So are insurance industry profits.

Cut rates, not rights!



The property/casualty insurance industry argues that its profits won't be truly adequate unless lawmakers enact so-called tort "reforms" such as caps on non-economic damages and repeal of New York's crucial construction worker protection law, Labor Law Sec. 240.



But the latest insurance industry financial data provides new evidence that this is untrue. Large increases in premiums and stronger investment returns are leading to soaring profits. Property/casualty insurers can and should provide real rate relief now.



Premiums are soaring, insurance industry investments are strengthening



• Recent increases in the property/casualty industry's premiums have far exceeded the inflation rate. Net written premiums were up 8.1% in 2001, 14.3% in 2002 and 9.8% in 2003. Barron's reports (April 5, 2004) "In the past few years, premiums charged by all insurers have soared, by as much as 100% on some lines" and "The post-9/11 upswing in property-casualty rates shows only tentative signs of peaking."



Premium hikes by some insurers have considerably exceeded national averages. According to the same Barron's article, "AIG's [one of the nation's largest insurers] net property and casualty premiums rose 28% in 2003 alone. They should continue to climb this year. And that will be very good for profits."



• Insurers took full advantage of the 9/11 tragedy to jack up rates. A report on commercial insurance rates issued by the New York City Comptroller found that in the year following September 11, 2001, commercial property insurance premiums in New York City rose 74%, commercial directors and officers insurance increased nearly 50%, and business interruption insurance premiums surged 52% -- many times higher than the increases in the year before the disaster. A Lloyd's of London members' newsletter called the September 11th attacks a "historic opportunity" to make money because premiums "had shot up to a level where very large profits are possible."



• Auto insurance premiums have increased faster than inflation. Nationally, average auto insurance premiums rose 8.6% in 2002, 7.8% in 2003 and are projected to rise another 6% in 2004.



• Homeowners' insurance premiums also surged. Premiums for homeowners' insurance rose nearly 50% in the past decade and are projected by the Insurance Services Office to rise another 8.1% in 2004.



• Investment returns are rebounding. From 2002 to 2003, the property/casualty industry's net investment gain increased 26.6% to $45.6 billion.



Property/casualty insurer profits: good times are here again



• Largest profits in years. Property/casualty insurers earned $29.9 billion in net profits in 2003, a 900% increase from 2002. These results were achieved even with California wildfire-driven catastrophic losses of $12.8 billion, double the catastrophic losses of 2002 and the third highest in a decade.



The property/casualty industry's profits in 2003 exceeded profits in every year since 1995 with the exception of the bubble-economy years of 1998 ($30.9 billion profit) and 1997 ($36.8 profit), when extraordinary investment gains swelled insurers' income.



• Record fourth quarter at Travelers. Travelers Property Casualty – one of the largest property/casualty insurers -- reported record fourth quarter 2003 net income of $489 million, thanks in part to an 11% increase in net written premiums.



• Robert Hartwig, chief economist for the industry's mouthpiece, the Insurance Information Institute, told a trade publication, "The sun shone brightly on the property-casualty industry in 2003."



• Profits continued to rise in the first quarter of 2004. Chubb, a major property and casualty insurer, posted a net income of $361 million for the first quarter, a 61% increase over 2003. Newly merged St. Paul Travelers reported a 73% jump in first quarter net income over the first quarter of 2003. The Hartford's property casualty business realized record operating profits of $297 million in first quarter, up 42% from the year before.