Moody’s Investors Service has assigned a stable outlook to US property and casualty (P&C) personal insurance in 2020, reflecting ample capital, effective risk management, and evolving technology.
Analysts noted that personal auto insurers reported good profitability for the majority of 2019, owing to cumulative rate increases and better than expected loss trends.
However, going forward the focus for these carriers is likely to be on growth as larger direct writers look to increase policies-in-force through advertising and effective underwriting, Moody’s explained.
“Profitability has been helped by lower frequency trends, which have stabilized in part as accident avoidance technologies have become more effective and widespread,” said Moody’s Vice President Paulette Truman.
“High severity trends, however, persist, driven by higher automobile repair costs, particularly for new vehicles with sensors and cameras in or near bumpers, and increasing litigiousness for automobile bodily injury claims. As a result, combined ratios will increase modestly in 2020.”
Homeowners insurers’ profitability has been weighed down over the past several years by catastrophes and severe weather, leading the market to push for rate increases of 4.5% in 2018 and 4% in 2019.
Moody’s is expecting low-to-mid single digit rate increases in 2020 to offset a projected non-catastrophe loss ratio trend, which is above historical ranges.
The rating agency added that its outlooks for 2020 consider fundamental credit conditions that will affect sectors for the next 12-18 months.