OLDWICK, N.J.--(BUSINESS WIRE)--Despite unprecedented challenges from the COVID-19 pandemic, the U.S. property/casualty (P/C) industry’s underwriting results showed sharp improvement in 2020, with net underwriting income increasing by 30% to $4.3 billion. However, according to a new AM Best report, the pandemic’s economic reach materially affected several individual P/C lines of business, some of which already had been struggling to generate better results leading up to 2020.
The financial results on each individual line of business, along with corresponding analysis, are detailed in a new Best’s Special Report, titled, “P/C Snapshot: Statutory Underwriting Results for Full Year 2020,” and the data is derived from companies’ statutory statements that were received by May 12, 2021.
According to the report, P/C insurers in 2020 posted year-over-year growth of 2.3% in direct premiums written despite an estimated $12.9 billion in returned premiums due to reduced exposures resulting from COVID-19. Stay-at-home orders imposed during the pandemic led to a decline in loss frequency for several of the industry’s largest lines - private passenger auto, commercial auto and workers’ compensation – and the lower incurred losses were the biggest factor for the improvement in underwriting profitability.
“Some of the 2020 events had unintended but positive impacts on the industry’s performance, but this could prove to be a one-year phenomenon,” said David Blades, associate director, industry research and analytics.
“Several lines of coverage started 2020 with the need to address significant, fundamental issues, to pave the way for sustainable improvement.”
The report notes that for lines of business such as commercial auto and catastrophe-exposed property, insurers have taken rate and underwriting actions to improve results. However, the occurrence portion of the other liability line, which are largely professional liability lines, including directors and officers (D&O) liability and cyber, still saw a significant underwriting loss in 2020 despite a push for more-adequate pricing and strong top-line premium growth. “Class action lawsuits are becoming a cottage industry among attorneys, driving an increase in claims activity,” said Christopher Graham, senior industry analyst, AM Best. “Rising cyber claims, particularly related to ransomware, also add further uncertainty for 2021.”
Still, the overall improved rate environment offset higher catastrophe losses in 2020, and with the reduced losses in the personal auto and workers’ compensation lines of business, the P/C the industry’s combined ratio in 2020 remained in line with its 2019 level at 98.8.
To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=309453.
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.
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