Best’s Special Report: Unprofitable Auto, Property Insurance Results Weaken Property/Casualty Industry’s 2022 Underwriting Performance

OLDWICK, N.J.--(BUSINESS WIRE)--Significant deterioration in the U.S. personal lines segment’s underwriting results, particularly in the private passenger auto line of business, sent the property/casualty (P/C) industry’s net underwriting income to a $25.7 billion loss in 2022, according to a new AM Best report.

The 2022 financial results on each individual line of P/C business, along with corresponding analysis, are detailed in a new Best’s Special Report, titled, “2022 P/C Snapshot: Unprofitable Auto and Property Results Weaken P/C Underwriting Performance,” and the data is derived from companies’ statutory statements that were received by May 31, 2023.

The report notes that underwriting loss in 2022 followed a $3.0 billion underwriting loss in 2021 and was driven by a $40.0 billion underwriting loss in the personal lines segment. Losses on the personal auto line of business represented more than 80% of the 2022 personal lines loss and was nearly eight times higher than in the previous year. The homeowners/farmowners line also incurred a net underwriting loss for a third straight year.

“P/C claims expenses were magnified by inflationary pressures on the costs of repairing property and automobiles, as well as by lingering supply chain issues,” said David Blades, associate director, Industry Research and Analytics. “These factors elevated claims expense figures and challenged insurance companies’ reserving practices, adversely affecting their operational performance.”

At the same time, the commercial lines segment generated positive underwriting results in 2022, and despite some volatility, has posted profitable results in four of the past five years. In 2022, the strong performance of workers’ compensation, other liability (claims-made), and surety coverage led to a $14.7 billion underwriting gain. Underwriting results for commercial property insurers, other liability (occurrence) and medical professional liability improved as well, even though those the lines remained unprofitable.

“Social and medical inflation have contributed to higher loss costs,” said Christopher Graham, senior industry analyst, Industry Research and Analytics, AM Best. “The number of claims has increased for virtually all casualty lines involving claimant-attorney representation for several years, with juries typically awarding plaintiffs large settlements. As medical technology and treatments advance, medical costs are likely to continue escalating.”

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=333726.

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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