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Home / Insurance / Triple-I Blog | 2021 P / C Underwriting Profitability may be hampered by CAT losses, social inflation, Triple-I / Milliman Predict

Triple-I Blog | 2021 P / C Underwriting Profitability may be hampered by CAT losses, social inflation, Triple-I / Milliman Predict



By Loretta Worters, Vice President, Media Relations, Triple-I

Property / crash insurance companies are expected to have less than star value in 2021, according to a forecast released today by the Insurance Information Institute (Triple-I) and the risk management company Milliman.

Sean Kevelighan, Triple-I

Forecast-presented in a members-only webinar, "Triple-I / Milliman Underwriting Projections: A Forward View," moderated by Triple-I CEO Sean Kevelighan -calculates a 2021

figure of 99.6.Combined ratio is the proportion of each premium dollar that an insurer spends on receivables and expenses.

The industry ended 2020 profitably, with a combined ratio of 98.7. 2022 and 2023 are estimated at 98.9 and 99.3, respectively.

Losses from atypical weather events during the first quarter – particularly the Texas freeze – got the year off to a rough start, explained Dave Moore of Moore Actuarial Consulting. [19659008] Natural c disaster losses at a decade high

Dave Moore, Moore Actuaria l

“Insured losses from natural disasters worldwide reached a ten-year high of $ 42 billion during the first half of 2021, with the largest loss related to extreme cold in the United States in February, Moore said, referring to Aon statistics. "Overall, disaster loss estimates range from $ 15 billion to $ 20 billion for the Texas freeze event, and the rest of the year does not look promising for CAT losses overall. Extreme weather in the spring resulted in thunderstorms and hail losses of several billion dollars, and the extreme drought in the West has helped drive another serious forest fire season. ”

Jason B. Kurtz, FCAS, MAAA, a principal and consulting actuary at Milliman- an independent risk management, benefits and technology company that the current tough insurance market will persist, especially on lines that have been hit hard by social inflation.A tough market is defined as a period of increased premiums and declining insurance capacity.

Jason B. Kurtz, Milliman

Premium growth for the industry is estimated reach 7 percent in 2021. Growth is expected to slow in 2022 and 2023 but will remain above 5 percent in both years.

"Lines such as commercial car, cow "Multipurpose and general responsibility will still struggle to bring their combined ratios below 100," he said. "With ransomware attacks on rising and tighter capacity, cyber bears will be watching and homeowners' insurance companies will have a tough year in 2021, but we predict improvement for 2022 and 2023."

Michel Léonard, PhD, CBE, Vice President, Senior Economist and Head of Triple-I's Finance and Analysis Department took a preliminary look at the real estate / accident industry results for 2021 and trends for the rest of the year . He noted that the insurance outperformed the overall economy in 2019 and 2020 but is unlikely to do as well in 2021.

Michel Léonard, Triple-I

“Right now, economists seem to be moving growth from 2022 to 2021. That is not good. for the insurance due to our industry's business cycles. Changing this growth means that we are not expected to surpass the broader economy in 2021 – but we are in 2022. The best thing for our industry is that growth increases, not decreases, from 2021 to 2022. ”

Roy Wright, IBHS

When In terms of forest fire season, Roy Wright, president and CEO of the Insurance Institute for Business & Home Safety (IBHS), noted that as the climate changes and the population expands to the wild urban interface, forest fires cut a suburban life. Losses from forest fires continue to increase year after year, clarifying the need for communities to adapt, he said.

Runaway Disputes

Commercial car insurance has been hit harder by legal trends than any other industry, according to David Corum, Vice President of Insurance Research Council (IRC).

David Corum, IRC

"We generally estimate that social inflation increased commercial receivables by more than $ 8 billion between 2010 and 2019," said Corum. "We also see evidence that social inflation is becoming a factor for personal He noted that a journal soon to be published by Triple-I, Moore Actuarial Consulting and the Casualty Actuarial Society will cover this subject more broadly.

Pat Sullivan, Editor-in-Chief and Conference Chair at Risk Information Inc ., explained that commercial car insurance companies spent the last few years trying to price themselves to profitability with little success.

Pat Sullivan, risk information

Sullivan noted that COVID-19 was not good for growth: “Commercial automatic direct premiums increased by approx. one percent in 2020, compared with 12 percent in 2019, 13 percent in 2018 and 9 percent in 2017. The underlying damage issues of commercial cars have not disappeared. ”

COVID-19 and business interruptions

The last 15 months have been extraordinary from a legal perspective on allegations of COVID-19 interruptions, according to Michael Menapace, partner, Wiggin and Dana LLP and Triple-I Non-Resident Scholar.

Michael Menapace, Wiggin and Dana

"To date, 80 percent of court decisions have rejected policyholders' claims regardless of whether the presence of SARS-CoV-2 or the government's shutdown order was the cause of their losses," Menapace said. The termination rate goes up to 95 percent when the insurance also includes virus exclusion. "

" Some deviating decisions have been made about business interruptions in favor of policyholders and some less favorable jurisdictions for insurers that we are looking at, "he said. "Insurers must also be vigilant by pushing back against proposals from state legislators or executive bodies that would change the terms of insurance contracts to provide coverage where nothing was intended and for which no premium was paid."

Menapace looks forward to continuing the trend of dismissals in the courts.

"There has only been one decision in the Court of Appeal to suspend operations," he said. "But over the next 12-18 months, the focus will begin to shift to state and federal appellate courts, which will have the final say on many of these issues."

Atlantic Hurricane Season

Dr. Phil Klotzbach, research researcher at the Department of Atmospheric Science at Colorado State University and Triple-I Non-Resident Scholar, gave his updated forecasts for the 2021. Hurricane Season.

Dr. Phil Klotzbach, Colorado State University

Klotzbach noted that 2021 is expected to have an above-normal Atlantic hurricane season, with 18 named storms, eight of which will be hurricanes. Of the eight, four will probably be major hurricanes (category 3, 4 or 5 with winds of 111 km / h or more). It can be compared to the long-term average of about 14 named storms, seven hurricanes and three major hurricanes.


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