Insurance Industry Profit Up in ’86

Earnings rebounded in 1986 for the nation’s property-casualty insurance industry as higher insurance prices buoyed a recovery from steep losses the previous two years, an insurance trade group said Monday.

The Insurance Information Institute also said the sharp rise in liability insurance rates, which largely were responsible for the profit turnaround, should cool a bit and liability insurance could become more readily available.

Quoting preliminary figures compiled by A. M. Best Co., an independent industry analyst, the trade group said property-casualty insurers had estimated operating income of $4.5 billion in 1986. That compared to losses of $5.6 billion in 1985 and $4 billion in 1984, according to the Best figures.

Profit of About 2.6%

With written premiums totaling $176.4 billion in 1986, industry profit amounted to about 2.6%, reflecting a profit of 2.6 cents for every dollar of premiums taken in by property-casualty insurers. That profit averaged about 4% over the last 10 years, the institute stated.

After-tax income surged to $11.5 billion from $1.9 billion in 1985.

“The turnaround in operating results for the property-casualty insurance industry basically reflected increased prices for insurance, particularly in the area of commercial liability,” the institute said in a news release.

A number of industry analysts had predicted some time ago that the sharp rise of insurance premiums over the past two years would ease the nation’s “liability crisis.”