The U.S. property/casualty insurance industry booked an estimated $12.1 billion net underwriting loss in 2018, the third consecutive year it landed in the red, according to a new A.M. Best market segment report.
Q4 catastrophe losses pushed the result above historic averages, but it represented an improvement over the previous year’s $25.3 billion net underwriting loss as the number of severe losses declined. Premium increases also helped lessen the blow caused by 2018’s catastrophe events, A.M. Best said.
Catastrophe losses trended toward normal levels through much of 2018 until the fourth quarter, due to Hurricane Michael and the California wildfires. That catastrophe spike drove 2018 net catastrophe losses above $37 billion in 2018, but they still landed below the record $53 billion in catastrophe losses produced in 2017.
For 2019, A.M. Best projects a net underwriting loss again, but with continued improvement. It said the combined ratio should improve slightly to 101.2 from 101.5 in 2018, assuming the expectation of more normalized catastrophe losses stands in the months ahead. Translated, that means A.M. Best’s net catastrophe loss prediction for the year lands around the $31 billion mark.
As well, A.M. Best said personal lines rate hikes will continue in 2019 but be higher than for commercial lines due to “increasing severity trends” even as companies reduce expenses.
Other 2019 predictions from the report:
A.M. Best’s full Market Segment Report is “2019 Review & Preview: US Property/Casualty.”
Source: A.M. Best