Strong US insurance industry premium growth predicted for 2021

New projections from the Insurance Information Institute and Milliman foresee strong premium growth for the US insurance industry in 2021, with an underwriting result comparable to last year. Despite myriad challenges, US auto, homeowners and commercial insurers are projected to realise a modest 1.9% growth in net premiums written and to book a combined ratio of 98.9 through year-end 2020, according to the Insurance Information Institute and Milliman. In 2021, net premiums written are predicted to increase 6.1%, and the combined ratio will improve slightly, to 98.5, said the two organisations. “We think the year ended surprisingly well, given the difficult circumstances the industry found itself in,” said James Lynch, senior vice-president and chief actuary, Insurance Information Institute. “We project a slight underwriting profit in 2020, fairly similar to 2019. We project similar results over the next two years.” Property/casualty insurance industry premium growth will rebound in 202I as the hard market in commercial lines will augment exposure growth from the economic recovery, said the two organisations. Speaking at an Insurance Information Institute virtual webinar, Jason Kurtz, a principal and consulting actuary at Milliman, said: “Economists expect growth to improve this year and next, which will fuel growth in exposures in most lines.” He noted, however, that recent signs of slowdown are concerning: “Retail sales fell in December, adjusted for the season, and new jobless claims remain stubbornly high. So that may delay growth, as might the spread of so-called variant coronaviruses, which the CDC is expecting will dominate cases in the spring.” Insurance Information Institute non-resident scholar Dr Phil Klotzbach told the webinar there is а six-in-ten сhаnсe of an асtіve hurricane season in 2021, соmіng off one of the mоѕt асtіvе in recent memory with 30 named storms. “Obviously, there is a tremendous amount that can change between now and when hurricane season starts on 1 June. But currently we do have a moderate strength La Niña event,” said Dr Klotzbach, who is research scientist in the Department of Atmospheric Science at Colorado State University. Also speaking at the webinar, Jeff Eddinger, senior division executive at the National Council for Compensation Insurance (NCCI), said: “The pandemic has landed the US economy into a recession. Significant job losses combined with changes in wage and rate levels have put downward pressure on premiums. NCCI estimates that private carrier net premium written will be down about 8% for 2020.” Mr Eddinger noted that as the virus began to spread in 2020, so did the concern that Covid-19 claims could overwhelm the system. “Fortunately, that has turned out not to be the case,” he said. “At the same time, there has been a drop in non-Covid claims, due in part to more remote work and less work-related driving. So far, incurred losses have decreased about 8%, in line with the drop in total premium. As a result, the estimated calendar year combined ratio for 2020 is almost unchanged from 2019, at 86. This would be the seventh straight year of underwriting profit for workers compensation.” He said the industry is financially strong but continues to face uncertainty: “The vaccine rollout has begun, but new cases of the virus in the US have soared to record levels. In addition to Covid claims, industry leaders are concerned about regulatory activity related to presumptions, the economic downturn and the long-term impact of working from home.”

Strong US insurance industry premium growth predicted for 2021

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