The property/casualty industry continues to face challenges in underwriting losses, according to the latest report from the Insurance Information Institute (Triple-I) and Milliman. The 2023 net combined ratio for the industry is forecast to be 103.9, with commercial lines performing better than personal lines. Commercial lines have a net combined ratio of 97.7, while personal lines have a ratio of 109.9.

The main driver of the adverse results is the record levels of severe convective storm losses. Despite this, the industry is experiencing growth, with a forecasted net written premium growth of 9.0% in 2023.

Michel Léonard, Chief Economist and Data Scientist at Triple-I, discussed the macroeconomic trends impacting the industry. He noted that the real gross domestic product (R-GDP) in the third quarter of 2023 accelerated to 4.9%, but economists still expect a year-over-year growth of 2.1%. Léonard also highlighted that the consumer price index (CPI) continues to slow down to 3.1% as of November.

Dale Porfilio, Chief Insurance Officer at Triple-I, discussed the overall underwriting projections for the property/casualty industry. He noted that the 2023 Q3 incurred loss ratio for homeowners, commercial auto, and commercial multi-peril exceeded expectations, with ratios above historical averages. Porfilio also mentioned that the net combined ratio for homeowners is forecasted to be 112.3, the worst since 2011. He expects personal auto and homeowners lines to improve in 2024 and 2025, but remain unprofitable.

Jason B. Kurtz, a Principal and Consulting Actuary at Milliman, provided insights into the performance of commercial lines. He stated that commercial property and workers' compensation continue to be profitable, while commercial multi-peril and commercial auto face challenges. Kurtz highlighted that the net combined ratio for commercial auto in 2023 is projected to be 110.2, the highest since 2017. For commercial multi-peril, the net combined ratio is forecasted to be 110.3, the highest since 2011.

Donna Glenn, Chief Actuary at the National Council on Compensation Insurance (NCCI), expressed concerns about rate adequacy and medical inflation. She mentioned that loss costs have been declining for 10 consecutive years, but payroll increases have been outpacing these declines. Glenn also noted that medical costs are increasing moderately, in the range of 2.5-3.5%.

The industry is closely monitoring these trends and analyzing the data to identify changes. NCCI is developing a medical price index to better understand the impact of medical inflation on workers' compensation claim costs.

Overall, the property/casualty industry is facing underwriting losses, but commercial lines are performing better than personal lines. The industry is experiencing growth, but challenges remain in certain areas such as severe convective storm losses and rising medical costs. Continued analysis and monitoring of these trends will be crucial for insurers to navigate the complex landscape of the property/casualty market.