Best’s Market Segment Report: Having Weathered 2020, Similar Challenges Persist for U.S. Property/Casualty Industry in 2021
25 Febrero 2021 - 8:17AM
Business Wire
Many factors that insurers encountered in 2020 likely will
continue to impact the financial performance of the U.S.
property/casualty (P/C) industry in 2021, with last year’s results
reflecting a still-firm commercial lines pricing environment and
higher-than-average catastrophe activity, according to AM
Best’s annual Review & Preview market segment report.
The new Best’s Market Segment Report, titled, “P/C Industry
Maintains Strong Capital in the Face of 2020 Challenges,” states
that despite the high level of catastrophe losses in 2020, AM Best
expects the P/C industry’s combined ratio to increase just slightly
to 99.3 for the year, as reduced frequency in auto lines and
improved pricing offset catastrophe experience. For most P/C lines
of business, a rebound in auto accident frequency and severity is
likely to lead to an expected combined ratio of 99.8 for 2021.
Many P/C insurers reacted to the COVID-19 pandemic with premium
adjustments to cover the months during which the most severe
restrictions were in place. Commercial lines premiums experienced
offsetting impacts from higher rates, but lower payroll and sales.
As a result, AM Best expects that net premiums written for the P/C
industry will increase just 1.8% for 2020, the slowest growth in
the past five years. However, with an increase in economic activity
expected for 2021, a boost in industry net premiums written is
likely.
Due to the deterioration in underwriting and investment
performance in 2020, AM Best projects that pre- tax operating
income for the year will drop by 15% to $51.1 billion, with net
income falling by 21% to $48.8 billion. In 2021, a modest
deterioration in underwriting results and a slight improvement in
investment results are likely to generate marginally higher pre-tax
operating income.
Litigation related to COVID-19-driven business interruption
claims in the United States has generally favored insurers, but if
recent cases in several states are broadly applied it could result
in greater actual loss payments in 2021. AM Best’s forecast for
2021 does not presume any significant increase in business
interruption payments related to the pandemic in the year, although
loss adjustment expenses are expected to remain above historical
levels as these cases proceed through the court system.
The market segment report also details AM Best’s expectations
for the diverse lines of business that comprise the P/C industry,
along with the rating agency’s market segment outlooks for these
segments. Overall, AM Best believes that the trends that had been
affecting the results of commercial lines insurers before the
pandemic, including social inflation, rising reinsurance costs and
secondary catastrophe events such as wildfires and convective
storms, will remain in 2021. Proactive underwriting actions in the
personal lines industry significantly diminished the adverse impact
of catastrophe and COVID-19 losses in 2020, but ongoing economic
pressures and the prevailing low interest rate environment will
remain headwinds throughout 2021. Ultimately, the skills the P/C
industry brought to bear in facing, and for the most part, meeting
the challenges of 2020, will be needed again in 2021.
To access a copy of this market segment report, please visit
http://www3.ambest.com/bestweek/purchase.asp?record_code=306262.
To view a video interview about this report with AM Best
Directors Jennifer Marshall and Michelle Baurkot, please visit
http://www.ambest.com/v.asp?v=ambrppc321.
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. For more information,
visit www.ambest.com.
Copyright © 2021 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Daniel Mangano Senior Financial Analyst +1 908
439 2200, ext. 5547 daniel.mangano@ambest.com
Michelle Baurkot, ARe, ARM Director +1 908 439
2200, ext. 5829 michelle.baurkot@ambest.com
Jennifer Marshall, CPCU, ARM Director +1 908
439 2200, ext. 5829 jennifer.marshall@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Jim Peavy Director, Communications +1 908 439
2200, ext. 5644 james.peavy@ambest.com