Although the US property/casualty industry’s bottom-line underwriting performance improved noticeably in 2019, several individual lines of business are struggling to generate better results in the face of natural catastrophes and wildfires.
A report from AM Best shows that some P/C lines of business such as homeowners multiperil and commercial multiperil, as well as commercial property, saw some relief in 2019 with the absence of extraordinary wildfire, windstorm or flood activities.
Nevertheless, loss creep attributable to accident-years 2017 and 2018 contributed to modest adverse loss reserve development in some lines, somewhat tempering the improvement in top-line underwriting results.
Overall, the P/C industry saw an increase of almost 400% in net underwriting earnings to $4.4 billion, and the industry’s combined ratio improved marginally to 98.8.
AM Best says numerous factors specific to the commercial automobile, medical professional liability and general (other) liability (occurrence and claims-made) lines of business continue to pose notable challenges to underwriters of those lines of coverage.
Each line’s combined ratio, excluding the claims-made portion of the other liability line, was more than 10 percentage points worse than that of the overall industry in 2019.
At the same time, key lines such as private passenger (i.e., personal) automobile and workers’ compensation are not without challenges, but their direct underwriting results remain profitable.
However, the report notes that the impact of the COVID-19 pandemic will pressure workers’ compensation premiums, which are already threatening to shrink workers’ compensation profit margins.
Additionally, the debate over COVID-19 claims qualifying for workers’ compensation coverage continues in many states, and the potential volume of claims could stress companies’ claim adjuster resources and overall claims handling operations.