AM Best reports that the US Property/Casualty (P/C) insurance industry faced another year of underwriting losses surpassing $20 billion in 2023, at $21.7 billion, largely driven by unprofitable private passenger auto and homeowners/farm owners market segments.
Together, these sectors incurred a combined net underwriting loss of $32.8 billion in 2023, showing a slight improvement from the $40 billion loss reported in 2022.
Somewhat offsetting underwriting losses in private passenger auto and homeowners/farm owners market sectors, the US commercial lines segment produced an underwriting gain of $10.2 billion, and US Workers’ Compensation a gain of $5.5 billion. Other parts of the casualty space also produced underwriting gains in the year, but, overall, the US P&C industry has fallen to an underwriting loss for the third consecutive year.
Historically, the performance of personal insurance lines has been pivotal for the P/C industry, with homeowners and private auto insurance collectively representing nearly half of the segment’s annual Direct Premiums Written (DPW).
Severe convective storms played a significant role in the downturn of homeowners/farm owners results in 2023, which marked a record year for severe convective storm losses. Weather-related losses continued to affect the industry, with catastrophe-insured losses in the US estimated at around $93 billion.
Over the past five years, commercial insurance lines have faced challenges due to adverse prior year loss reserves, latent liabilities, and increased competition in longer-term coverage areas. However, recent years have shown improvements due to sustained price increases in underperforming segments, strong performances in workers’ compensation, general liability (claims made), and surety markets, as well as enhanced underwriting discipline.
While commercial auto and certain liability lines experienced decreased underwriting profitability, workers’ compensation, commercial property, and MPL (Medical Professional Liability) lines showed improved combined ratios for the year.
Inflation, despite a decline throughout 2023, continues to impact claims costs across various insurance lines, including personal and commercial auto, homeowners, and commercial property.
Increasing reinsurance costs, particularly for catastrophe-exposed lines, along with tightened capacity in affected property markets, have necessitated higher account pricing that contributed to higher calendar-year premium totals.
David Blades, Associate Director of Industry Research and Analytics at AM Best, commented, “With only one hurricane to make landfall in the United States in 2023, most catastrophe losses were from secondary perils.
He added, “Personal lines insurers have been aggressively pursuing rate and pricing increases for a few renewal cycles now to reflect calculated rate needs more accurately, and to spark a reversal of recent underwriting losses. However, regulatory constraints, inflationary pressures and more frequent and severe weather-related events continue to dampen results.”
The post US P/C industry saw $22bn underwriting loss in 2023: AM Best appeared first on ReinsuranceNe.ws.
