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Insurance companies may struggle to earn profits in 2010, says survey

Posted On Thu, January 21, 2010

Even thought the Great Recession is almost a thing of the past, many insurance experts feel its effects will be felt well into 2010 throughout the industry.

According to the 14th annual Property/Casualty Insurance Joint Industry Forum conducted by the Insurance Information Institute and released last week, 77 percent of executives in the property and casualty insurance industry expect fewer financial problems to arise in 2010 than did one year earlier.

However, despite the expectations of fewer financial issues, the study also found that most industry heads were not necessarily expecting to turn a profit either. Among the findings was the expectation that only 51 percent of respondents expected improvements in the personal auto insurance industry, while only 37 percent expected good things from the homeowners insurance industry.

"Looking forward to 2010, the economic environment will improve, but only gradually, and we will have difficulty coping with some severe problems related to the 'Great Recession,'" said Dr. Steven N. Weisbart, senior vice president and chief economist with the I.I.I.

Weisbart added that many insurance companies would likely have reduced chances at turning a profit because of interest rates that will likely remain low, cutting back on the profit from their investments in intermediate- and long-term bonds.
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