Insurance is a unique product because it is a tool for dealing with risk. The monetary payoff to the consumer is unknown at the time of sale, but potentially it can be many times greater than the premium paid. Therefore, the battle for market share in the personal auto and homeowners insurance markets is only part of the story. Growing market share can have a highly negative impact on the bottom line if the wrong exposures are written or if policies are inadequately priced.

The property and casualty industry tends to be cyclical, and insurers have entered a “soft market” where growth in net written premiums will most likely languish in the zero to 5% range over the next several years. As pressure on margins has heated up, some insurers are spending more on advertising while others are investing in state of the art analytics for more effective risk assessment. Also, as growth in distribution channels stabilizes, marketing niches will be difficult to find. Companies must invest either in innovation in their cost controls and/or maximize investment returns.

What this implies is that for most companies to be competitive in the near term, they will need to reassess and maximize the efficiency of everything from actuarial methods to claims management. While some growth opportunities in niche markets (such as renters/tenants insurance) may still exist, insurers will need to maintain or improve the reliability of their services. This report looks at these trends, as well as consumer perceptions of insurers, providing recommendations as to how insurers might better position themselves in the marketplace.

This report provides an overview of the personal property and casualty insurance industry. Most personal property and casualty insurance products are discussed in this report, but the focus is primarily on the two major types of P&C insurance—property insurance (homeowners/business/renters) and auto insurance. General trends impacting the industry are discussed, including the factors impacting growth in market share and industry profitability. Consumer perceptions of insurers are examined as well, with a particular focus on potential markets for renters/tenants insurance.