The US insurance industry expects a slowing in premium growth while the combined ratio continues to hold steady. The Insurance Information Institute’s annual “Groundhog” report – by a panel of Wall Street stock analysts and industry professionals – forecasts an average increase in net premiums of 2.7% this year, down from an estimated 4.3% in 2004 and 9.8% in 2003.

The report also notes an industry-wide average combined ratio of 98.9%, a slight slip from an estimated 98.7% in 2004.

The panel says the biggest downside risks for 2005 are a loss of pricing and underwriting discipline.

The report says Congress will probably revisit the issue of class action reform in 2005, which fell short by a single vote in the Senate in 2004. Failure to get the Terrorism Risk Insurance Act extended in 2004 was also a big disappointment.