Chapter 8 "Special Issues"

The property-liability insurance industry has traditionally segregated operating divisions and returns into two components, underwriting and investments. The concentration of most insurance textbooks, allocation of personnel and management attention has been on the underwriting side of operations. In many cases this emphasis on underwriting has led to neglect of investment operations. Until recently investment income was generally not considered tin ratemaking. This neglect has tended to produce an investment strategy for insurers that is often inefficient and uncoordinated with underwriting performance. In insurance companies investment departments tend to be understaffed and investment managers undercompensated relative to other investment organizations such as stockbrokers and pension fund managers.