While US Property-Casualty Premiums Grow, Some Lines Remain Challenged

Despite posting 9 percent premium growth in 2021, US property-casualty insurers still face challenges in several lines of business, A.M. Best says in a new report.

The rating agency noted that despite the premium gains, the US property-casualty insurance industry still experienced a $3 billion underwriting loss in 2021.

In the Best's Special Report, "Property/Casualty Snapshot: Insurers Navigate Pandemic and Elevated Secondary Perils," Best said that among the challenged coverage lines was private passenger auto, which experienced a 24 percent increase in incurred losses in 2021.

Data in the report is based on insurers' statutory statements that were received by May 19, Best said.

The Best report noted that the 2021 underwriting loss followed a $4.4 billion underwriting gain in 2020. Catastrophe losses remained elevated in 2021, the rating agency said, adding 8 points to US property-casualty insurers' 99.5 percent combined ratio.

"Property-casualty insurers' enterprise risk management skills have been put to the test the last couple of years," David Blades, associate director, industry research and analytics at A.M. Best, said in a statement. "Property underwriters are facing primary and secondary peril catastrophe risks that have reverberated throughout the reinsurance market, further pressuring underwriters of homeowners/farm owners coverage and of commercial property."

Best said that numerous factors specific to the auto, medical professional liability, and general liability lines of business continue to pose significant challenges to underwriters. Loss severity in both the private passenger and commercial auto lines show no signs of lessening, Best said. And while medical professional liability underwriting results improved, the segment still posted an $834 million loss in 2021 on an 8 percent increase in incurred losses.

While loss costs remain a challenge to general liability lines, years of rate increases have allowed insurers to grow their top-line premium, Best said.

"Across the industry, claims costs, social inflation, and nuclear verdicts continue to pressure results," Christopher Graham, senior industry analyst at A.M. Best, said in the statement. "Other issues such as social unrest, cyber attacks, and extreme climate-related events have made setting year-end reserves more challenging. Together with economic inflation and the possibility of a recession, many P&C insurers' bottom-line profitability could suffer in 2022."