Fremont General Corp., a Los Angeles-based insurer and financial-services holding company, said Monday that it has stopped writing commercial property-liability insurance because of the disproportionate losses that the business has generated. However, Fremont intends to allow present property-casualty policies to lapse rather than cancel them, the company said.
"This has been a very difficult area for us," spokesman James R. McNiel said.
It has been a very difficult area over the last six years for the property-casualty insurance industry in general, which lost a record $3 billion last year. In the face of mounting claims, many insurers are sharply raising prices and restricting coverage and, in some areas, abandoning coverage altogether, noted Jennifer Nicholson of the Western Insurance Information Service in Santa Ana.
Taking Harder Look
"We're going to see a lot more of this," Nicholson predicted.
Insurers generally are taking a harder look at the kind of business and degree of risk that they are willing to take on, agreed Mike Dirienzo, assistant manager of ISO Commercial Risk Services in the City of Commerce.
Fremont's action reflects a general realigning by insurers of their "books of business" to accentuate the positive. As James A. McIntyre, Fremont's president and chief executive, put it: "We are focusing our capital in those areas that promise strikingly improved results following recent traumatic rate increases."