OLDWICK, N.J.--(BUSINESS WIRE)--AM Best is maintaining a stable market segment outlook on the U.S. personal lines insurance industry for 2022, due to the property/casualty segment’s strong risk-adjusted capitalization, underwriting actions limiting volatility in the homeowners segment and the acceleration of technology adoption in the pandemic environment.
In its new Best’s Market Segment Report, “Market Segment Outlook: U.S. Personal Lines,” AM Best states that the segment was well-positioned to manage the challenges during 2021, which has been plagued with above-average catastrophe activity and a return to pre-pandemic frequency trends, as well as increased loss cost severity. Heading into 2022, according to the report, risk-adjusted capitalization levels remain robust, with positive cash flows and favorable liquidity further supporting the position.
Rate actions in the homeowners segment returned in late 2020 and continued throughout 2021, which was necessary as catastrophe activity remained above average in 2021. Along with other various underwriting actions, carriers were able to limit the impact of catastrophe losses in 2021. However, secondary perils have become just as problematic, and given the escalating challenges of climate risk, personal lines insurers are planning for a greater number of potentially worse catastrophe events amid higher reinsurance pricing.
Technology initiatives to improve personal lines insurers’ underwriting and pricing tools picked up significantly during the pandemic. Insurers are seeing auto claims frequency rebound alongside adverse severity trends at the same time that the industry is facing major supply chain disruptions and higher inflation, which are resulting in higher costs for materials and parts. Given these pressures, innovative use of technology and data analytics to strengthen underwriting, claims handling and ratemaking remain key to reaching profitability targets.
AM Best expects companies in the U.S. personal lines segment to continue to respond appropriately to market challenges; however, should risks fall materially outside of current expectations, the outlook could be revised.
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=315092.
To view a video with AM Best Managing Director John Andre about the U.S. personal lines market segment outlook, please visit http://www.ambest.com/v.asp?v=ambpcploutlook1221.
Leading AM Best analysts will review 2022 market segment outlooks for the U.S. insurance industry’s major segments and the global reinsurance industry in an online briefing scheduled for Thursday, Dec. 9, 2021 at 2:00 pm EST. To register for the briefing, please go to www.ambest.com/conferences/USMB2022.
To view current Best’s Market Segment Outlooks, please visit http://www.ambest.com/ratings/RatingOutlook.asp.
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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