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The P&C Insurance Industry - Poised for Growth?

The P&C Insurance industry seems to be rebounding back to profitability after consecutive years of losses.  Improvement in underwriting operations, rising premiums, and lower catastrophe losses seem to be the key growth drivers in H1 2018.

A closer look at the H1 2018 industry performance results (Source: NAIC  - U.S Property & Casualty Insurance Industry 2018 First Half Results) indicates that the industry seems to be getting onto a growth trajectory with earned premiums amounting to $298 billion – a 10% increase YOY in comparison to H1 2017. In addition, a remarkable improvement was also witnessed in underwriting operations with an underwriting profit of $7 billion in H1 2018 against a $3.2 billion loss in H1 2017 and a $182 million loss in H1 2016.

All the three P&C Insurance markets – Personal, Commercial and Combined lines witnessed growth in Direct written premiums (DPW).

  • Total DPW across all lines stood at $340.5 billion – a 6% increase YOY
    • Personal Lines – DPW of $176.4 billion ( 51.8% of the Total DPW)
    • Commercial Lines - DPW of $122.8 billion (36.1% of the Total DPW)
    • Combined Lines – DPW of $41.2 billion (12.1% of the Total DPW)


Though all the three lines continued to grow, the highest YoY growth % in DPW was witnessed in the Combined Lines (7.8% growth) followed by Personal Lines (6.9% growth).

Are Expenses Climbing again?

The industry achieved a combined ratio of 96.3%, an improvement of 4.3 points over the combined ratio of 100% in 2017.

However, underwriting expenses soared 12.5% (to $85 billion) in H1 2018 compared to H1 2017. The Expense Ratio hovered at around 27% - a negligible change over H1 2017 and H1 2016. 

NAIC
Source: NAIC - U.S Property & Casualty Insurance Industry 2018 First Half Results[/caption]   2019 and ahead…

Overall with net income growth of 102.8% YoY at $35 billion, the H1 2018 results paint a growth story. However, predicting the future performance of this industry still remains challenging, with several external factors including uncertain economic conditions, interest rates movement, and unforeseen catastrophes influencing the performance of this industry.

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