US commercial P&C may hold underwriting margins through ‘23: Moody’s

US commercial P&C insurers can maintain their recently achieved underwriting margins through 2023 while growing the business by some 10%, analysts at  Moody's have said in a report maintaining their ‘stable’ outlook for the sector.

Any number of carriers appear on track in 2022 for their best full-year combined ratio since 2007, cats be willing, raising hopes the trend can hold.

“We expect the price increases to be in line with loss costs in the year ahead, leading to continued strong commercial lines underwriting results,” analysts wrote.

Inflation will set the bar for that goal. Construction materials and labour costs continue to push loss severity and Moody's express concern about what a spread of inflation to medical costs or severe return of social inflation could do to casualty.

Inflation-chasing rates plus rising exposures should lead to ca 10% premium growth to about $430 billion in 2023, Moody's believes.

“We expect commercial lines premiums to continue to grow into 2023 driven by client demand and pricing increases.”

That premium growth will come despite economic slowdown. Moody's has cut its 2022 and 2023 GDP forecasts, without fear that it will damage the story of rising rates and expanding exposures.

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