Analysts at Fitch Ratings have released a report which shows that the P&C industry remains stable, despite the considerable economic challenges from the ongoing coronavirus pandemic.
Last year the US P&C industry faced many operating challenges from COVID-19, which resulted in vast changes in the workplace and economic environment as well as a large volume of unique claims related to the pandemic.
However, despite these challenges the industry reported a statutory underwriting profit for the third consecutive year in 2020, with a 99% combined ratio, and net income steadily around $60 billion each year from 2018-20.
Industry policyholders surplus dropped sharply in Q1 2020, from equity market turmoil in the early stages of the pandemic.
However, the report also explained that the markets rebounded later in the year and operating earnings materialised, P&C insurers ended the year with a stronger capital position as PHS expanded by over 5% year-on-year to new record levels.
It also outlined that the industry underwriting performance is expected to improve this year, which is due to sharp premium rate increases in commercial lines pricing, presuming catastrophe-related losses revert towards past norms.
The market surveys indicate that pricing continues to increase at a level unseen since 2003, the last true commercial lines hard market.
The unfavourable profit experience in several property and liability segments, combined with ongoing pandemic-related uncertainty promote further rate increases through 2021.
Managing Director James Auden commented: “Industry underwriting performance is anticipated to improve in 2021, largely due to sharp premium rate increases in commercial lines.
“The P&C industry posted slightly improved underwriting results and growth in policyholders’ surplus in 2020, despite tremendous uncertainty amid the coronavirus pandemic, with prospects for better performance in the coming year.”
