US P&C market headed for underwriting loss as auto spins out of control

US property and casualty insurance will slip back to a technical underwriting loss in 2022, driven the "significant" deterioration visible in auto, experts at  Insurance Information Institute (Triple-I) and Milliman have claimed.

“Underwriting losses are expected to continue as more rate increases are needed to offset economic and social inflation loss pressures,” Milliman principal and consulting actuary Jason Kurtz said.

The industry's combined ratio will likely rise by 1.2 percentage points (pps) in 2022, driven by the 3.8 pps gain for personal auto to 105.2%, analysts for the industry groups have claimed. Loss ratios for personal auto over the most recent three quarters have been the worst in two decades, analysts said.

Pricing gains have proven more resilient than many had expected early in the year, but not everywhere sufficient to keep up with the rise in claims.

“We forecast 2022 premium growth of 8.5%, lower than the 9.2% growth in 2021, but still strong due to the economic recovery and a hard market,” Dale Porfolio, chief insurance Officer at Triple-I, said.

Commercial auto will also be a money-loser at the level of technical underwriting profits, with a combined ratio on track to hit 101.4% this year.

“We are forecasting underwriting losses for 2022 through 2024 due to prior year development and the impact of inflation, both social inflation and economic inflation,” Dave Moore of Moore Actuarial Consulting added of his forecast.

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