In a recent virtual webinar, the Insurance Information Institute (Triple-I) and Milliman shared underwriting projections and insights into the property/casualty insurance industry, shedding light on challenges and trends shaping the sector.
The forecast for the 2023 net combined ratio for the property/casualty industry is 103.9, with commercial lines outperforming personal lines.
Commercial lines are expected to have a net combined ratio of 97.7, while personal lines face a higher ratio of 109.9. The surge in severe convective storm losses is identified as the primary driver of the overall adverse results.
According to Michel Léonard, Chief Economist and Data Scientist at Triple-I, key macroeconomic trends, including inflation, interest rates, and overall economic growth, are impacting the industry’s results.
Real gross domestic product (R-GDP) in the third quarter of 2023 accelerated to 4.9%, but economists expect year-over-year growth of 2.1%. Year-over-year property/casualty underlying growth grew 1.3% in 2023, forecasted to grow 2.6% in 2024.
Dale Porfilio, Chief Insurance Officer at Triple-I, highlighted the challenging financial results for homeowners, stating that the net combined ratio for 2023 is forecasted at 112.3, the worst since 2011.
The 2023 net written premium growth rate of 12.4% is the highest in over a decade, reflecting rate increases to offset inflationary loss costs.
Porfilio expects improvements in personal auto and homeowners lines in 2024 and 2025, but they are anticipated to remain unprofitable.
Commercial property and workers’ compensation continue to be profitable, according to Jason B. Kurtz, a Principal and Consulting Actuary at Milliman.
However, commercial multi-peril and commercial auto face challenges. Commercial auto, in particular, is experiencing underwriting losses, with a projected 2023 net combined ratio of 110.2, the highest since 2017.
Donna Glenn, Chief Actuary at the National Council on Compensation Insurance (NCCI), identified rate adequacy and medical inflation as top concerns.
Loss costs have declined for ten consecutive years, but Glenn emphasised the need for a vigilant approach to trends, citing payroll increases outpacing loss cost declines.
