US Property and Casualty Industry's Performance Shows Recovery from 2020

The US property and casualty (P&C) insurance industry experienced 10 percent year-over-year growth in direct premiums written through the third quarter of 2021, according to A.M. Best.

The rating agency described the US P&C industry's performance as a "return to normalcy following 2020."

A Best's Special Report, titled "U.S. Property/Casualty Top Line Premiums Up, Loss Ratio Deteriorates through Third-Quarter 2021," also notes that the industry's direct loss ratio deteriorated to 62.8 percent through the third quarter of 2021 from 60.2 percent over the same period in the prior year. Over the first three quarters of 2019, the last prepandemic year, the US P&C industry recorded a direct loss ratio of 59.8 percent, Best said.

"Although premium volumes have rebounded with the pandemic slowdown, natural catastrophe insured losses in 2021 were nearly double that of 2020, mainly from Hurricane Ida," Christopher Graham, senior industry analyst at A.M. Best, said in a statement.

According to Best's report, for some lines such as commercial auto and general liability, it's uncertain whether recent premium growth has effectively countered rising loss costs and inflation pressure.

In the statement, David Blades, associate director, industry research and analytics at A.M. Best, said that rising inflation will likely affect the profitability of all major P&C lines, particularly those insuring long-tail coverage lines with significant outstanding reserves. "Trends related to social inflation and nuclear jury verdicts also could intensify those concerns," Mr. Blades said.

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