In 2020, U.S. P/C Insurers’ Decade-Long Run of Premium Growth Will End: S&P

July 2, 2020

The U.S. P/C insurance industry will end a 10-year run of premium growth in 2020 due to COVID-19 fallout, according to new research from S&P Global Market Intelligence.

“Factors including macroeconomic contraction, government-imposed restrictions, policyholder credits and other measures of relief related to the pandemic will combine to end the industry’s decade-long run of premium growth in 2020,” the report concludes.

S&P expects direct premiums written will decline 1.8 percent in 2020, versus growth rates that surpassed 5 percent in 2018 and 2019. What’s more, according to the ratings agency, this is only the third year-over-year decline in direct premiums written since at least 1997.

The ratings agency predicts a 100.7 combined ratio for the U.S. P/C insurance industry in 2020, following two consecutive years where the combined ratio was a bit below 100. In 2019, carriers produced a 98.9 combined ratio.

The year 2020 will be more than just one where rates decline due to short-term circumstances. Because of COVID-19, the struggles carriers are facing will likely continue for months, S&P said, testing the industry’s overall resiliency.

Here are some additional S&P predictions for 2020 and beyond:

The full S&P Global Market Intelligence analysis is: COVID-19 to test U.S. P&C insurance industry’s resilience in 2020 and beyond.”

Source: S&P Global