Insurance: Fields Of Green And Disaster Areas

How well will insurers perform in 1995? The answer depends on which business they're in. Health insurers, spared reform from Capitol Hill, are still pushing consumers into managed care and reaping robust profits. On the other hand, property and casualty insurers were rocked by the 1994 California earthquake, snowstorms in the Northeast, flooding in the South and West--and a plague of environmental claims. Overall, they paid out $15 billion for disasters in 1994--their second-worst year in history.

Property insurers still have a hefty $180 billion in reserves against future losses. But those reserves are coming under increasing strain: Many insurers who sold liability policies in the 1960s and '70s are being asked to fund cleanups of environmental sites. "Environmental claims are the single biggest issue facing the insurance industry," says Dean R. O'Hare, chief executive of Chubb Corp. in Warren, N.J. Indeed, the rating agency A.M. Best Co. predicts that insurers will pay a staggering $132 billion for environmental and asbestos claims.