COVID-19, Catastrophes Prompt US Property-Casualty Net Income Drop

The US property-casualty insurance industry's net income dropped 27.5 percent during the first 9 months of 2020 as the industry dealt with the COVID-19 pandemic and a historic catastrophe season, according to a new report.

The report from data analytics provider Verisk and the American Property Casualty Insurance Association found the industry realized $35.1 billion in net income during 2020's first 3 quarters, down from $48.4 billion in net income during the same period a year earlier. Net underwriting gains for the period declined to $0.3 billion in 2020 from $5.4 billion during the first 9 months of 2019.

"The deterioration in underwriting results were due, in part, to a major increase in the losses and loss adjustment expenses from catastrophes, which more than doubled to $47.1 billion for 9-months 2020 from $21.5 billion in the same 9-month period a year earlier," a Verisk statement said.

As the insurance industry's underwriting gains declined, insurers' combined ratio declined to 98.8 percent during the first 9 months of 2020 from 97.8 percent a year earlier.

PCS, a Verisk business, reported that 2020 set a record for the number of US catastrophic events. The year's catastrophes included 19 events with at least $1 billion in direct insured losses in the United States (17 during the first 9 months), including the first riot and civil disorder event to exceed that threshold.

Policyholders' surplus rose $16 billion to $863.3 billion as of September 30, 2020, from $847.3 billion as of December 31, 2019, driven by growth in the stock market, the report said.

"The industry continues to face many unknowns stemming from the COVID-19 pandemic," the statement said. "Although the year started strong and insurers reported robust premium growth and promising underwriting results in the first quarter, the results of the remainder of the year reflect the major disruptions of daily life and the economic downturn stemming from COVID-19."