The COVID-19 pandemic and the recession it started will result in no premium growth for 2020 and a deteriorating combined quota for the real estate / claims industry, according to the new report, Insurance Information Institute (Triple-I) / Milliman P / C Underwriting Projections: 2020-2022.
Direct and net premium written will be virtually unchanged from 201
"The pandemic and recession reduced exposures in personal auto and multiple commercial lines," said James Lynch, FCAS, senior vice president and chief actuary of the Insurance Information Institute (Triple-I). "Total premiums are expected to be flat," Lynch said, adding, "a tough market for commercial lines drives higher prices, offsetting some of the deterioration in exposure."
"Although there is enormous uncertainty in terms of size, the pandemic creates insurance losses that are not considered in either disaster or pricing," said Jason Kurtz, FCAS, a chief and advisory actuary at Milliman. "Not surprisingly, pandemic losses can cause insurance outcomes to deteriorate."
The report found that a number of legislative and legislative proposals have the potential to affect exposures and losses from pandemics.
A major hurricane or cumulatively severe burning season can also affect the combined relationship, the report found. Right now, the report plans a typical year for disaster losses, although most hurricane forecasts predict more storms than average.
Other areas to look at
Other areas to consider include the impact of the pandemic on workers' compensation, in particular the change in the burden of proof on the employer for certain types of applicants (ie adoption) and the change in exposure from persons who works from home. Employee compensation saw five years in a row through 2019, where that industry showed a guaranteed profit; which can be changed with COVID-19.
Economic trends also play a role. The report assumes that the exposures are grossly growing and shrinking with the economy. If the recovery is slower or faster than expected, premium growth will be affected.
The report is an analysis of Triple-I and Milliman based on an actuarial model based on information from a number of publicly available sources as well as input from thought leaders and experts at both organizations. It predicts that premiums will grow 7 percent in 2021 and 6 percent in 2022 when the economy recovers, and the total ratio will fall to 99 for both years as industrial prices for the effects of the pandemic and the higher tax rates this year serve out.
The complete webinar, exclusively available to Triple-I members, projected insurance results for several industries: personal car, homeowner, commercial car, general liability, property, commercial multiple and employee compensation.