NEW YORK, July 11, 2024 – Favorable first-quarter economic and underwriting results for property/casualty insurance align with projections that the industry will see a small underwriting loss in 2024 and achieve profitability in 2025, according to the latest forecasting report from the Insurance Information Institute (Triple-I) and Milliman.
The report, titled "Insurance Economics and Underwriting Projections: A Forward View," highlights several key points:
- Homeowners insurance underwriting losses are expected to continue through 2024-2025 but become profitable in 2026. The line is projected to maintain double-digit net written premium growth during this period.
- Personal auto net combined ratio has improved slightly from prior estimates and is on track for profitability in 2025.
- Commercial lines' net combined ratio for 2024 remains unchanged despite minor shifts in commercial property (-1 point), workers’ compensation (-1 point), and general liability (+1 point).
- Net written premium growth rate for personal lines is expected to surpass commercial lines by over eight percentage points in 2024.
Dale Porfilio, FCAS, MAAA, Triple-I’s chief insurance officer, commented on the performance gap between personal and commercial lines. “This quarter, we are projecting commercial lines underwriting results to outperform personal lines premium growth by over five points in 2024. The difference largely illustrates how regulatory scrutiny on personal lines has curbed insurers' ability to increase prices reflecting significant inflation impacting replacement costs through and after COVID.”
Jason B. Kurtz, FCAS, MAAA, a principal and consulting actuary at Milliman, noted long-term challenges faced by commercial multi-peril insurance. “While the expected net combined ratio of 106.2 is one point better than 2023, matching the eight-year average, the line has not been profitable since 2015. With a Q1 direct incurred loss ratio of 52% and slowing premium growth rates, we see some improvement but continuing unprofitability through 2026,” Kurtz said.
In contrast, Kurtz highlighted robust performance in workers’ compensation. “The expected 90.3 net combined ratio marks nearly a one-point improvement from prior estimates and would mark ten consecutive years of profitability for workers’ comp,” he stated. “We continue to forecast favorable underwriting results through 2026.”
Donna Glenn, FCAS, MAAA, chief actuary at the National Council on Compensation Insurance (NCCI), provided insights into medical costs within workers' compensation. "Medical costs are going up but have not experienced the same type of inflation as the broader economy," she said. Since 2015 both workers' compensation severity and medical inflation have grown at a moderate rate of about two percent per year.
Michel Léonard, Ph.D., CBE, chief economist at Triple-I discussed P/C replacement costs relative to overall inflation. "For the last twelve months economic drivers of insurance performance have been favorable to the industry," Léonard said. However he warned that recent developments could change this outlook due to slower-than-expected U.S economic growth influenced by uncertainties around interest rate cuts from the Federal Reserve along with increasing geopolitical risks affecting global supply chains.
Note to Media:
"Insurance Economics and Underwriting Projections: A Forward View" is available exclusively to Triple-I members and Milliman customers; media may request copies for reporting purposes only.
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