Fitch Ratings says the US property/casualty insurance industry is getting better – but that’s not really good enough. The industry’s average combined ratio will fall from 107.2% last year to 103.9% this year, with premium incomes on the rise.

But it’s “still insufficient for producing an adequate return on capital”, Fitch said in a report. Director James Auden said companies have “restored underwriting disciplines in response to the more apparent poor pricing of recent years”.

But with bad investment results and the current economic and investment climate, significant improvement in the financial results is unlikely in the near term. “With new money rates remaining low, the insurance industry needs to boost profitability and earned surplus by generating underwriting profits.”

The agency believes harder premiums will boost the bottom lines of companies “that are unfettered by prior period underwriting and reserving problems”. But it’s hanging on to its “negative” outlook.