Navigating the Complex Landscape of P/C Insurers' Profitability Amidst Economic Challenges

Profitability Under Pressure: The Current State of P/C Insurance

The U.S. property/casualty (P/C) insurance industry is facing significant challenges as profitability remains under pressure, according to recent underwriting projections by Triple-I and Milliman actuaries. The industry's combined ratio, a key measure of underwriting profitability, is estimated to be 101.3 for 2021, indicating an underwriting loss. Factors such as higher-than-average inflation, lower underlying growth, and increased catastrophe losses are contributing to this trend.

Personal and Commercial Auto Insurance: Diverging Trends

On the personal auto side, the estimated combined ratio for 2021 has increased to 99.9 due to deteriorating non-catastrophe loss trends and excess catastrophe losses. Meanwhile, commercial auto underwriting losses are forecast to continue but are expected to improve year-over-year. The impact of social inflation on commercial auto liability claims is quantified in a recent Triple-I paper, which estimates an increase of over $20 billion between 2010 and 2019.

General Liability and Workers Compensation: Profitability Amidst Challenges

General liability underwriting losses are expected to continue, but profitability should improve due to rate increases. Workers compensation underwriting profits persist, though margins are shrinking. The pandemic recession, remote work, and economic recovery are influencing the volume and location of workers comp risk, with claim frequency remaining below pre-pandemic levels.

For readers, it is crucial to stay informed about the evolving landscape of P/C insurance. Understanding the factors influencing profitability can help in making informed decisions regarding insurance policies and investments in the sector.