U.S. personal auto insurers are showing some improvements in their bottom lines after a tough couple of years, according to a new A.M. Best market segment report.

To be sure, the numbers are not exactly stellar just yet. The average combined ratio was 102.6 in 2017, but that is a 3.8 point improvement over a 106.4 combined ratio in 2016. U.S. private passenger auto insurers produced a combined ratio of 104.6 in 2015, 102.3 in 2014 and 101.4 in 2013, A.M. Best said.

According to A.M. Best, a number of factors are helping to improve results, with 2017 being a pivotal year.

“In 2017, auto insurers caught up to years of increasing severity and frequency trends with rate, underwriting and additional actions affecting earnings through auto insurance premiums,” A.M. Best noted in its report. “The [private passenger auto] industry maintains strong risk-adjusted capitalization and sustained investment in technology amid aggressive implementation of underwriting initiatives and enterprise risk management that continues to evolve.”

Also, the industry’s reserve development saw its favorability improve in 2017 versus 2016, according to the report.

Data available up to the 2018 third quarter is showing a similar improvement trend, A.M. Best said. It noted that U.S. personal auto insurers saw the average liability loss ratio dip 4.7 points lower through Q3 2018 compared to the same period the year before. A number of insurer also reported reduced frequency trends into 2018, the report stated.

Despite improvements, the sector has at least one big worry that continues: Loss severity, which A.M. Best said keeps rising even as loss frequency levels off.

Among carriers that reported severity increases: GEICO booked property damage/collision severity increases ranging from 4 percent to 6 percent in 2017, and bodily injury severity hikes of between 5 percent and 7 percent. During the same year, Allstate said it dealt with a 4.5 percent property damage increase, and a bodily injury severity increase of 22 percent on closed claims.

According to A.M. Best, severity trends have continued through the 2018 third quarter.

Source: A.M. Best