P/C expenses outpace premium growth: S&P

Property/casualty insurers’ expense growth outpaced their premium growth in 2007, and this gap is expected to continue this year as net written premium growth remains relatively flat, Standard & Poor’s Corp. said in a special report.

Because of soft market conditions, net written premiums increased only 1.3% in 2007 while expenses increased 4.4%, according to the report. New York-based S&P had expected the industry’s expense ratio for 2007 to increase to 26.2%, up from 25.6% in 2006. Instead, it increased to 26.4%.

In 2006, net premiums written increased 3.8%, while expense growth increased 8.0%.

“Salaries and commissions make up the bulk of expenses for the U.S. property/casualty industry,” the report said.