More market consolidation in the auto insurance industry to come in 2006

It has been noted that after the major natural events like the recent Hurricane Katrina the insurance payouts have risen significantly. That may instigate many smaller auto insurers to sell out in order to protect their profits.

Particularly states with low auto insurance loss rates will be more affected by such larger payouts.

Bigger auto insurance companies with more access to innovative price setting technologies and better advertising coverage will find it easier in the coming years. That would include companies like Geico, the auto insurer of Berkshire Hathaway, Inc. (BRKA, BRKB), Allstate Corporation (ALL), Progressive Corporation (PGR) and the United States Automobile Association (USSA). Nevertheless smaller companies with underwriting margin of over 4 percent and positive growth should also find it easy to perform regardless of the major natural events affecting the insurance industry.