Analysts at AM Best identified seven insurance company impairments in the US property and casualty (P&C) industry, which was six fewer than in the previous year.
The rating agency noted that five of the impairments involved auto insurers, with the remaining two a workers’ compensation insurer with business written primarily in New York and New Jersey and a title insurer that underwrote policies primarily for owners and mortgagees of residential properties in New York.
Overall, from 2000 to 2020, 395 property/casualty insurers became impaired, with 321 insolvent liquidations and 74 rehabilitations, of which 37 were closed during the period and 37 remained open.
In addition, there were 54 conservatorships, all of which led directly to either rehabilitation or liquidation.
AM Best defines impairments as situations in which a company has been placed, via court order, into conservation, rehabilitation or insolvent liquidation.
Primary line of business details were identified for 387 of the 395 impaired companies, with workers’ compensation being the leading line of business, accounting for 26% of the impairments.
Personal lines insurers accounted for 28%, split between private passenger automobile (20%) and homeowners (9%), while commercial lines insurers, excluding workers’ compensation, accounted for 22%, and the remaining 24% was split among specialty lines.
Despite the number of workers’ compensation impairments, AM Best acknowledged that one of the most notable shifts over the past two decades has been the reduction in workers’ compensation insurer impairments, along with the re-emergence of difficulties for insurers in the medical professional liability segment and the general reduction in impairments overall.
