Inflation, Supply Chain Disruption and Political Risk Affecting Personal Automobile – InsuranceNewsNet

NEW YORK, August 12 — The Insurance Information Institute issued the following press release:

The 2022 combined ratio for the P&C branch is expected at 100.7, i.e. a deterioration of 1.2 points compared to 2021, driven by a sharp deterioration in the personal automobile branch.

According to the actuaries’ latest underwriting projections at Insurance Information Institute (Triple-I) and Millimman.

The quarterly report, Insurance Information Institute (Triple-I)/Milliman Insurance Economics and Underwriting Projections: A Forward View, was presented on August 11 at exclusive members only (https://iiimembership.org/) online seminar.

Michael LeonardPhD, CBE, Chief Economist and Data Scientist at Triple-Idiscussed key macroeconomic trends impacting P&C insurance industry results, including underlying growth and replacement costs.

Leonard noted that insurance growth continues to be constrained by economic fundamentals, with replacement cost increases at multiples of pre-COVID levels and underlying growth below average.

“Underlying growth of 0.35% in P&C insurance, while more resilient than the -0.93% in the economy, is both down year-over-year and since the beginning of the year,” Leonard said, noting that it’s too early to tell whether improvements in used autos and building materials prices are sustainable. “We would like to see at least another quarter of improvements before fully accounting for their impact on replacement costs for homeowners, commercial property and auto insurance.”

Dale PorfilioFCAS, MAAA, Chief Insurance Officer at Triple-Idiscussed overall P&C industry underwriting projections.

“We expect premium growth of 8.5% in 2022, down from 9.2% growth in 2021, but still strong due to economic recovery and a challenging market,” Porfolio said. He added that while disaster-related losses in 2022 were lower in the first half than in 2020-21, they were higher than in 2018-2019.

Regarding personal auto, Porfilio said the 2022 net combined ratio is expected to be 105.2, 3.8 points higher than in 2021, mainly due to a significant deterioration in damage covers. automotive physics.

“For total personal auto, quarterly direct loss ratios deteriorated rapidly from a pandemic low of 47.5% for the second quarter of 2020 to an average of 72.8% for the last three quarters of the third. quarter of 2021 to the first quarter of 2022. The recent deterioration was driven by physical damage covers, with an average direct loss ratio of 78.6% over the last three quarters, the worst in two decades. he declares.

Jason B. KurtzFCAS, MAAA, principal actuary and consultant at Milliman – a leading global consulting and actuarial firm – said another year of underwriting losses was likely for the multi-risk business line.

“Underwriting losses are expected to continue as further rate increases are needed to offset economic and social pressures from inflation losses,” Kurtz said. For the commercial property segment, he noted that the industry is seeing strong premium growth and rate increases should help ease some of the pressure from catastrophe losses.

Regarding the workers’ compensation line, Kurtz noted that the line’s multi-year underwriting profits are expected to continue, although margins are expected to decline further through 2024.

“The WE the economy has now recovered all the private sector jobs lost as a result of the pandemic. While this is good news for the economy, this fact, combined with the low unemployment rate, will likely limit the growth of workers’ compensation premiums in the future,” Kurtz said.

David MooreFCAS, MAAA, President of Moore Actuarial Consultingsaid the 2022 combined ratio for commercial auto is expected to be 101.4.

“We expect underwriting losses for 2022 to 2024 due to the development of the previous year and the impact of inflation, both social inflation and economic inflation,” Moore said.

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Original text here: https://www.iii.org/press-release/inflation-supply-chain-disruption-and-political-risk-impacting-personal-auto-loss-pressures-hard-pc-market-expected-to-continue- due to inflation-new-report-triple-i-milliman-watch-081122