Property-Casualty Insurers’ Profit Falls
In 2007 there was a decrease of nearly 6% on profits of property-casualty insurers in the United States of America.
This is a sign that earnings are going to decline. For the customer, the decrease of costs of insurance is a good thing, however, for the insurer this is bad news. Insurance premiums move in cycles. Prices shoot up when a crisis or costly event causes losses. Investors pour capital into the industry because they want to capitalize on the event. However the money pooled will drive insurers into competition and that plunges the prices again. Later on, insurers will be in big trouble for selling cheap policies and paying more for losses on those policies than they took in as premiums.