September 07, 2020
(Jersey City, NJ, Economic & Insurance News by Insurance Market 360 – www.insurancemarket360.com) – Insurance providers face several challenges, including the largest-ever quarterly decline that came in the first quarter of 2020. The surplus for the private property/casualty insurance industry fell $75.9 billion with the stock market’s downturn, Verisk and the American Property Casualty Insurance Association , (APCIA) reported. Other challenges could arise from the impact of the COVID-19 pandemic.
As of March 31, the surplus declined to $771.9 billion, down from the record-high $847.8 billion in December 2019. The decline in valuations of insurers’ investments is said be to blame.
Net income after taxes in the first quarter was at $17.9 billion; the net underwriting gain in the same time was $6.3 billion, which was 19.9% higher than the previous year. Net written premiums increased 6.2% to $164.4 billion in the first quarter of 2020.
The disruptions caused by the COVID-19 pandemic go beyond investment losses in the first quarter, and based on available information and forecasts, Verisk and APCIA expect significant changes in insured exposures, number, and mix of claims. Verisk research estimates that personal auto insurers have offered more than $13 billion in policyholder rebates and credits. MarketStance, a Verisk solution, estimates that at least 1 million insured businesses in the United States will fail in 2020, and direct written premiums in commercial lines will decrease 2.8%.
“The historic drop in industry surplus in the first quarter was concerning for many insurers, as it began to show the impact of COVID-19 on their results,” said Neil Spector, president of ISO. “But the impact of COVID-19 on the industry is just beginning to unfold. Will personal auto insurers see the reduction in losses matching the policyholder rebates and credits offered this spring? To what extent will commercial lines premiums be affected by the challenges facing the economy? How will insurers adapt and continue to serve their customers efficiently in our new normal?”
Verisk recently created an online resource page at verisk.com/insurance/covid-19/ to help insurers learn about new regulations, read about critical insights, and discover new products being created to address the effects of COVID-19. It also recently launched a web page that provides strategies for personal lines insurers in the new normal: verisk.com/newnormal.
View the full report from Verisk and APCIA here.
Source: Verisk Analytics.
https://www.verisk.com/press-releases/2020/july/propertycasualty-insurance-industry-suffered-largest-ever-drop-in-surplus-in-the-first-quarter-of-2020/