U.S. P/C insurance industry net income plunged 26 percent in the 2020 first half, as underwriting results and investment gains took a hit from COVID-19, catastrophes and other instabilities, according to a new report from data analytics company Verisk and the American Property Casualty Insurance Association.
After-tax net income came in at $24.3 billion in the 2020 first half, down from $32.8 billion over the same period the previous year.
“Slow improvements in the financial performance of the U.S. property casualty insurance industry were abruptly reversed in the first half of 2020 due to the compounded effects of COVID-19, catastrophes, and civil unrest,” Robert Gordon, senior vice president for policy, research and international at APCIA, said in prepared remarks.
He warned that the trend points to more property/casualty insurance industry trouble in the months ahead.
“The combined ratio rose above 100 percent in the second quarter, and potential near-record third quarter catastrophe losses are all but certain to push underwriting results further into negative territory,” Gordon said. “In addition to experiencing increased losses, insurers are facing a significant drop in revenue from the economic downturn, greater outflows from promised auto insurance rebates to consumers, and a continuation of historically depressed investment returns. While the industry remains stable and able to meet its expected obligations, aggregate policyholder surplus declined $22.1 billion in the first half and the unusual combination of losses and future uncertainty is weighing heavily on renewals.”
Neil Spector, president of Verisk-owned ISO, said in prepared remarks that COVID-19 caused a reduction of both premiums and losses “as business in many sectors slowed, auto traffic decreased, and insurers provided premium relief to customers in both personal and commercial lines,” said Neil Spector, president of ISO.
Source: Verisk, APCIA