Commercial Lines Boost US Property and Casualty Underwriting in 2023

The US property and casualty (P&C) insurance industry experienced its second consecutive year of net underwriting losses exceeding $20 billion in 2023, driven by poor results in the private passenger auto and homeowners/farmowners segments, according to a new report by AM Best.

The Best's Special Report, 2023 P/C Snapshot: Personal Auto and Homeowners Results Continue to Dampen P/C Underwriting Performance, compiles data from statutory statements as of June 17, 2024. The report reveals a $21.6 billion net underwriting loss in 2023, following a $25.8 billion loss in 2022. The personal lines segment saw a $32.8 billion underwriting loss, with the private passenger auto line reporting nearly $17 billion in losses, half of the previous year's figure. Homeowners/farmowners underwriting losses more than doubled to $16 billion.

David Blades, associate director, Industry Research and Analytics at AM Best, noted that despite only one hurricane making landfall in the United States in 2023, secondary perils caused significant catastrophe losses. "Personal lines insurers have been aggressively pursuing rate and pricing increases for a few renewal cycles now to reflect calculated rate needs more accurately, and to spark a reversal of recent underwriting losses. However, regulatory constraints, inflationary pressures and more frequent and severe weather-related events continue to dampen results," Mr. Blades said.

Conversely, the commercial lines segment achieved a net underwriting profit of over $10 billion in 2023, attributed to up-pricing and effective risk selection. The workers compensation line remained profitable, benefiting from continued reserve releases on older claims. While commercial property and medical professional liability insurance showed improved underwriting results, they remained unprofitable.

Christopher Graham, senior industry analyst, Industry Research and Analytics at AM Best, highlighted the challenges faced by commercial casualty insurers. "The emergence of new types of liability is a challenge for commercial casualty insurers, particularly in light of evolving legal and societal attitudes toward dietary supplements and nutraceuticals; for example, the advent of new chemical and materials technologies, genetic engineering research, and other trends," Mr. Graham said.

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