Were groundhogs on the mark in 2004?(Recap)(insurance industry)(Brief Article)

National Underwriter Property & Casualty-Risk & Benefits Management, February, 2005

Just for fun, we took a look at the predictions of the groundhogs surveyed last year by the Insurance Information Institute. As it turns out, the groundhogs came pretty close to the ultimate reality on combined ratio, on average predicting a 100.3 result--very close to the 98.7 estimated for 2004, despite the impact of four major hurricanes last fall.

However, the groundhogs were way too optimistic on pricing trends--on average predicting a gain in industry net written premiums of 7.4 percent, when the reality is turning out to be far more modest growth of 4.3 percent. This makes their proximity to the bull's eye on the combined ratio even more remarkable--the industry actually outperformed the groundhogs' best guess despite far slower premium growth than...

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