Top insurers' weight distorts purpose

August 20, 2002

Growing market dominance contradicts benefits of insurance, consumers pay the price


Inman News Features

As the top property and casualty insurers continue to devour market dominance they increasingly face staggering losses in the event of any single catastrophic event, while consumers pay the price of fewer choices, higher premiums and less coverage, according to a recent study conducted by Weiss Ratings Inc.

The growing concentration of the homeowners insurance market is a national phenomenon, according to Weiss, which reported that at year-end 2001, the top eight homeowners' insurers controlled nearly 60 percent of the national market compared with 26 percent in 1965.

"This (market dominance) directly contradicts the purpose of insurance, which is to spread risk," said Weiss VP Melissa Gannon. "Insurers and consumers are at great risk if a catastrophic event causes serious financial damage, leaving policyholders in danger of losing their coverage."

Eight large property and casualty insurers are exposed to nearly 70 percent of the home insurance risk in five hurricane-prone states, according to the report. The insurers are State Farm Group, Allstate Insurance Group, Zurich Financial Services Corp., Nationwide Corp., USAA Group, Citigroup Inc., Chubb & Son Inc. and Hartford Fire and Casualty Group.

State Farm and Allstate control the largest interests in the five states with 25.8 percent and 13.8 percent, respectively, while the others control interests ranging from 8.6 percent to 1.6 percent.

In seven Western fire-prone states, eight insurance companies are exposed to nearly 73 percent of the home insurance risk. The insurers are State Farm, Zurich, Allstate, USAA, Safeco Insurance Group, California Auto Group, American Family Insurance and Nationwide.

State Farm, Zurich and Allstate maintain the largest controlling interests in the seven states, with 23 percent, 19.8 percent and 13.6 percent, respectively, while the rest control interests ranging from 2.5 percent to 4.5 percent.

Weiss is an independent provider of ratings and analyses of financial services companies, mutual funds and stocks.

Copyright: Inman News Service


Contact ALTA at 202-296-3671 or communications@alta.org.

SoftPro is the nation's leading provider of real estate closing and title insurance software. With more than 14,000 customer sites and over 60,000 users nationwide, this award-winning software offers a suite of products designed to increase your volume and revenue by reducing the time it takes to do closings. SoftPro has been recognized by the American Business Awards every year since 2007 - winning awards for Superior Customer Service, Support and Product Development. North American Title Insurance Company (NATIC) is a seasoned title insurance underwriter, helping title agents to achieve their individual business goals for more than 50 years. Today, the company conducts real estate settlement services in 39 states and the District of Columbia through a network of experienced, independent agents.