The

INSURANCE

RECORD THE VOICE OF TEXAS INSURANCE Published Since 1934 • Dallas, Texas May 21, 2009 • Vol. 75 No. 11

Having Weathered Market Storms—

Insurers Brace for hurricane Season

NEW YORK—Although the economic turbulence had a significant adverse impact on the financial performance of U.S. property/casualty (P/C) insurers last year, the industry nonetheless remains strong at the start of the hurricane season, which is only weeks away, according to the Insurance Information Institute (I.I.I.)

Explanation “The basic explanation for the resilience and strength that P/C insurers have demonstrated during the current and countless past financial crises are attributable to a deeply entrenched and conservative operating philosophy that leads directly to superior risk management strategies,” wrote Dr. Robert Hartwig, an economist and president of the I.I.I.,

in his year-end 2008 analysis of the industry’s financial performance. “Insurers necessarily run their business under the assumption that every day is a potential doomsday — because it is.”

Despite sizable losses in their investment portfolio, P/C insurers ended 2008 well capitalized by historical standards and prepared for the 2009 hurricane season, which starts on June 1.

Dr. Hartwig pointed out that the ratio of premiums written to available surplus, a simple measure of financial leverage, stood at 0.95 as of December 2008. This meant that for continued on page 6

Consumers Pare
Back in Downturn

In This Issue

TDI Posts March enforcement Actions

MALVERN, Pa.—A new study by the Insurance Research Council (IRC) finds that many Americans have taken steps to reduce personal insurance costs in response to the economic downturn, but maintaining essential auto and homeowners coverage remains a priority for the vast majority of consumers.

A Response to April Foolishness by Kenneth R. Auerbach 8

ACORD Framework Gains Momentum

AFI Now Provides Financial

Services Through AFBA Alliance 11

Twenty-eight percent of those with auto insurance coverage surveyed for the study reported shopping for lower rates when they normally would not have done so. Among those with auto or homeowners insurance, 15% said they had increased their insurance deductibles or reduced the amount of coverage in order to reduce premium costs.

P&C Composite Rate holds Steady

SELLING STRATEGIES:

Terrible or Terrific?

continued on page 6

ACORD ACe Designation Program Marks Milestone

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