Best’s Special Report: US Property/Casualty Industry Suffered Second-Straight Year of $20 Billion-Plus Underwriting Losses in 2023
- July 02, 2024 08:39 AM (EDT)
//BestWire// - Unprofitable results in the U.S. private passenger auto and homeowners/farmowners market insurance segments led to a second-straight year of net underwriting losses in the property/casualty (P/C) industry eclipsing $20 billion, according to a new AM Best report.
The 2023 financial results on each individual line of P/C business, along with corresponding analysis, are detailed in a new Best’s Special Report, titled, “2023 P/C Snapshot: Personal Auto and Homeowners Results Continue to Dampen P/C Underwriting Performance,” and the data is derived from the aggregation of companies’ statutory statements that was completed as of June 17, 2024.
According to the report, the $21.6 billion net underwriting loss in 2023 followed a $25.8 billion underwriting loss in the previous year, predominantly driven by a $32.8 billion underwriting loss in the personal lines segment. The private passenger auto line of business reported an underwriting loss of nearly $17 billion in 2023, approximately half the loss reported in 2022. However, net underwriting losses in the homeowners/farmowners line more than doubled over the previous year to $16.0 billion.
“With only one hurricane to make landfall in the United States in 2023, most catastrophe losses were from secondary perils,” said David Blades, associate director, Industry Research and Analytics, AM Best. “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 commercial lines segment generated positive results in 2023 from up-pricing and more-effective risk selection, achieving a net underwriting profit of more than $10 billion. The workers’ compensation line of business remained profitable with continued reserve releases on older years, including claims over 10 years old. Underwriting results for commercial property and medical professional liability insured improved as well, although those lines remained unprofitable.
“The emergence of new types of liability is a challenge for commercial casualty insurers, particularly in light of evolving legal and societal attitudes towards dietary supplements and nutraceuticals; for example, the advent of new chemical and materials technologies, genetic engineering research, and other trends,” said Christopher Graham, senior industry analyst, Industry Research and Analytics, AM Best. .
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=344091.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.