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All Pain, No Gain

Insurers may be doing better financially in 2003, but shortfalls in reserve funds and lackluster markets may mean premiums will keep moving up for a while

By Russ Banham | Updated on April 01, 2003

Logically speaking, one might assume that 2003 should be a pretty good year for insurance companies. Premiums for almost every type of insurance are increasing by double digits for the third year in a row. The industry managed to secure a federal fund that exempts it from covering the bulk of another devastating terrorist attack. And recent bankruptcies among marginal insurers have cleared away some of the clutter from certain markets.

So are insurers happy? Let’s say, they’re not ecstatic. Sure, as an industry their stocks have managed to outperform the S&P 500 Index. But between the debacles at giants like Enron Corp. and WorldCom Inc. and the destruction of the World Trade Center at the hands of terrorists, carriers found themselves entering this year significantly low on reserves and basically unprepared for any unforeseen tragedies produced by Mother Nature or by man himself.

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