Best’s Special Report: Despite Fair Results for U.S. Property/Casualty Industry in 2021, Certain Lines Still Lagging Behind

Despite premium growth of more than 9%, U.S. property/casualty (P/C) insurers still incurred an $3 billion underwriting loss in 2021, reflecting the challenges in specific lines of business, including private passenger auto, which experienced a 24% increase in incurred losses, according to an AM Best report.

The 2021 financial results on each individual line of P/C business, along with corresponding analysis, are detailed in a new Best’s Special Report, titled, “Property/Casualty Snapshot: Insurers Navigate Pandemic and Elevated Secondary Perils,” and the data is derived from companies’ statutory statements that were received by May 19, 2022.

The report notes that underwriting loss in 2021 followed a $4.4 billion underwriting gain in 2020. Catastrophe losses remained elevated, adding eight points to the P/C industry’s combined ratio of 99.5. “Property/casualty insurers’ enterprise risk management skills have been put to the test the last couple of years,” said David Blades, associate director, industry research and analytics. “Property underwriters are facing primary and secondary peril catastrophe risks that have reverberated throughout the reinsurance market, further pressuring underwriters of homeowners/farmowners coverage and of commercial property.”

Numerous factors specific to the auto, medical professional liability, and general (other) liability (occurrence and claims-made) lines of business continue to pose notable challenges to underwriters. Loss severity in the private passenger and commercial auto segments show no signs of abating, with personal auto writers suffering their second-worst underwriting results in five years. Although the medical professional liability line improved its underwriting results, the segment still posted an $834 million loss on an 8% increase in incurred losses. Loss costs continue to plague the general liability lines, though years of rate increases have enabled carriers to grow top line premium.

“Across the industry, claims costs, social inflation and nuclear verdicts continue to pressure results,” said Christopher Graham, senior industry analyst, AM Best. “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.”

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=320760.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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