US property-casualty insurers rocked by huge losses

US property-casualty insurers rocked by huge losses | Insurance Business America

Property

US property-casualty insurers rocked by huge losses

Challenges in personal auto and homeowner segments take their toll – but there was a boost in the commercial sector

Property

By
Roxanne Libatique

The US property/casualty (P/C) insurance sector experienced a second year of net underwriting losses exceeding $20 billion, driven by significant unprofitability in the private passenger auto and homeowners/farm owners segments, as detailed in a new AM Best report.

US personal lines segment’s underwriting loss in 2023

In 2023, the industry recorded a net underwriting loss of $21.6 billion, following a $25.8 billion loss in the prior year.

AM Best pointed to the personal lines segment as a major contributor, with a $32.8 billion underwriting loss.

Within this segment, the private passenger auto line reported an underwriting loss of nearly $17 billion, approximately half of the previous year’s loss. Conversely, the homeowners’/farm owners’ line saw net underwriting losses more than double to $16.0 billion.

David Blades, associate director industry research and analytics at AM Best, noted that personal lines insurers in the US have been targeting rate and pricing increases over the recent renewal cycles.

“With only one hurricane to make landfall in the United States in 2023, most catastrophe losses were from secondary perils,” he said. “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.”

US commercial lines segment’s net underwriting profit in 2023

Despite the challenges in personal lines, the commercial lines segment achieved a net underwriting profit of over $10 billion in 2023, thanks to effective risk selection and pricing strategies.

The workers’ compensation line remained profitable, benefiting from continued reserve releases on older claims, including those over a decade old.

Underwriting results for commercial property and medical professional liability insurance showed improvement, though these 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 toward 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.