On the cusp of summer, as forecasters predict an active hurricane season, it is timely to compare and contrast the property and casualty insurance market in two states that often bear the brunt of severe tropical weather activity, Louisiana and Florida. 

A recent article from Insurance News Net paints a picture of the upbeat forecast for the insurance market in Louisiana stemming from legislation passed in 2007 aimed at attracting new insurers and decreasing the reliance on the state’s insurer of last resort.

Contrasting that, SNL is reporting that an increase in insolvencies in the Florida insurance marketplace, potential rate declines, and an uncertain political and regulatory situation are scaring the insurance industry in the Sunshine State.  And that is in addition to the possible increase in severe weather this hurricane season.

In both states, the current economic situation in has created a surge in the stress related to employment and home values, which has led to a rapid increase in the frequency and size of non-catastrophe type losses since the end of 2006.  This erodes profit from insurers in these non-hurricane years when they should be earning large underwriting gains to finance future storms.

What are your thoughts on the insurance industry in Louisiana and Florida?  Does Florida need to take a page from the Louisiana play book to bolster their insurance industry? Let us know.

A recent report from PricewaterhouseCoopers indicates that many analysts who cover the insurance sector want substantial changes to insurance reporting standards.  These analysts expressed concerns about the framework of the current insurance financial reporting and inadequate disclosure of important information on financial statements.

Currently, the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) are reportedly working jointly to develop a single, new standard of reporting that will address recognition, measurement, presentation and disclosure requirements for insurance contracts, and provide investors with more useful information to make informed decisions.

All of the surveyed  American analysts, and over three-quarters from other parts of the world, believe that insurance should have its own reporting model, with more than half preferring a different standard for life and non-life insurance.  Those who prefer adoption of the new reporting standards said such a change would make it easier to compare the insurance industry with other industries.

What do you think? Does the insurance industry need new financial reporting standards or do the current methods work fine? Let us know.

Will 2010 see an increase in M&A activity in the insurance industry?  Some analysts think so, and ING’s plan to split its banking and insurance operations, and eventually divest its insurance business, could be the catalyst.  Some observers believe that as insurers review their operations to start the new year, rebuilding capital and re-pricing products, they may sell or buy businesses.  And their success will embolden other tentative companies to try the same.

Do you see an increase in M&A activity in the insurance industry in 2010?  Would an increase help the industry as a whole, or hurt?  Let us know what you think.