Moody's Investors Service says the U.S. property and casualtypersonal-lines sector remains stable despite expected HurricaneSandy losses.

• SANDY NEWS: Nov. 16, 2012 NCUA, FDIC Issue Guidance

“We expect that losses from Hurricane Sandy will not jeopardizecapital for major property and casualty insurers, although it willweaken 2012 earnings,” says Enrico Leo, Moody's assistant vicepresident and author of the report, “U.S. Personal Lines IndustryOutlook Remains Stable.”

The personal lines insurance sector credit profile will bedriven by insurers' focus on price adequacy in light of risingloss-cost trends, Moody's says.

Automobile rate increases are expected to outpace higherliability loss-cost trends and help offset low re-investment rates,alleviating operating-margin pressure.

Sandy will likely spur additional rate increases and otherunderwriting actions, Moody's projects.

Homeowners insurers had already been instituting rate increases,applying tighter underwriting standards and adjusting reinsuranceprograms in response to record high-frequency, low-severityweather-related events in 2011.

The industry is focused on policy retention, notes Moody's, asrenewal business continues to be more profitable than newbusiness.

Moody's says that new products such as usage-based insurancealso have the potential to allow insurers to differentiatethemselves with a competitive advantage. But insurers will have totread carefully through challenges such as customer acceptance,start-up costs and regulatory approval, Moody's notes.

This article was originally posted at PropertyCasualty360.com,a sister site of Credit Union Times.