NORTH BAY - Perhaps now more than ever, insurance is an industry of many moving pieces. Where one sector surges the other might subside. Local brokers and industry experts sounded off last week on trends in the market as well as rising topics, including fire, high-deductible plans and long-term care products.
Property/ casualty still a buyers' market
If anything about the recession could be considered positive, the continued soft property/casualty market might be one.
Where in normal economic times the competitive pricing that began in 2007 may have slowed by this year, suppressed exposure growth has held premiums and is not expected to slow until 2011, according to a recent industry report.
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"We have been thinking and expecting a change for some time, and we seemed to be nearing the trough of the down cycle. But with such a difficult economy, carriers know consumers can't bear an increase," said Napa-based Sander, Jacobs, Cassayre Insurance Services President and owner Jeff Erickson.
According to an industry forecast by analysts Conning Research & Consulting this month, competitive pricing will continue, but less dramatically in 2010, and begin to firm up the following year. Personal lines will be the first to increase, while the commercial side will likely be a mix of positive and negative price trending through 2011.
Another report released by MarketScout earlier this month said the market showed an average 6 percent decline in premiums in May, compared with an 11 percent drop in pricing for new policies in the same month last year.
Health care pricing increase slower, but what will be the cost of reform?
Benefits costs are expected to continue to climb next year, though at a slower pace, according to one industry report.
But local brokers worry legislators' race to submit a reform bill would come with an even greater cost to private buyers maybe not this year, but the next.
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"We have some concerns with the proposed public plan and whether there will be true competition," said Santa Rosa-based Sitzmann, Morris & Lavis Senior Consultant Victor McKnight, who recently traveled to D.C. to testify to legislators on the potential impact of the plan.
"Of particular interest is how they plan to compensate physicians. There have been some early conversations that reimbursement would be the same as Medicare, and since that under-pays physicians, that would create an issue where the public plan would have a distinct advantage. ... Everyone in a few years would be on the public plan."
Legislators continued to wrangle with different models for the reform last week, attempting to pass a bill before the August recession. The debate includes whether to implement an employer mandate, taxing benefits or the wealthy to pay for the $1 trillion price estimate and how to keep a proposed public health plan from driving up costs in the private market.
A watered-down version suggests incentives for healthy living and tax deductions for employers that provide coverage.
"My personal view is they need to slow down," said Jordan Shields Insurance Partner Keith McNeil. "It is so complicated and has so many moving parts that a heavy-handed approach brings in a lot of unintended consequences."