Property/Casualty Insurers Had Solid Results Last Year, but Face Considerable Challenges in 2020 Due to COVID-19
May 07 2020 - 11:17AM
The private U.S. property/casualty insurance industry had solid
results in 2019, with increases in net income, underwriting gains,
and policyholders’ surplus, but faces considerable challenges in
2020 as the effects of the COVID-19 pandemic unfold, according to
Verisk (Nasdaq:VRSK), a leading data analytics provider, and the
American Property Casualty Insurance Association (APCIA).
Net income after taxes rose to $61.4 billion in 2019 from $59.6
billion in 2018. Net underwriting gains increased to $3.7 billion,
after $0.2 billion of net underwriting losses a year earlier, due
in part to high catastrophe losses in 2018. The industry’s surplus
reached a record high $847.8 billion by the end of the 2019, as the
stock market recovered from a significant downturn a year
earlier.
Moving forward, several factors related to COVID-19 could affect
industry results in 2020, including the following:
- Millions of people are staying at home and driving less,
leading many insurers to react by returning a portion of personal
auto premiums during the pandemic.
- Many businesses had to close or significantly curtail their
activities.
- High unemployment rates and declines in consumption and
business activity may persist through 2020.
- The economic effects of the pandemic could suppress insured
commercial exposures and limit demand for a wide range of
coverages.
- The stock market plunge in first-quarter 2020 could potentially
generate significant capital losses for insurers, reverting the
recent gains in the industry’s surplus.
“The property/casualty industry finished 2019 with modest
underwriting gains after two consecutive years of reporting
underwriting losses,” said Robert Gordon, APCIA senior vice
president, policy, research, and international. “The combined ratio
improved slightly year-over-year but worsened significantly
compared to the first half of 2019. While insurers enjoyed
significant capital gains in 2019, the additional surplus has been
substantially decimated by subsequent market declines and COVID-19
related expenditures in the first few months of 2020. As we enter a
period of increased uncertainty due to the coronavirus, insurers
will be closely monitoring legislative, regulatory, and lawsuit
abuse trends that could negatively impact the industry’s financial
stability.”
“Insurers experienced solid results last year, supported by a
drop in catastrophe losses and economic growth,” said Neil Spector,
president of ISO. “However, insurers are facing a wide range of
challenges this year because of COVID-19. The pandemic has already
delivered unprecedented shocks to the economy and created much
uncertainty about how the remainder of 2020 will shape up. It’s
unclear how the pandemic will affect underwriting results and the
performance of insurers' investments in 2020. Like many other
businesses, insurers are looking to protect the well-being of their
staff while dealing with unprecedented operational challenges in
their effort to provide uninterrupted service. Carriers need to
stay informed of the latest developments in the marketplace and be
equipped with robust data and remote technology to meet the
challenges they’ll face both now and in the future. At Verisk,
we’ve 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 we’re creating to address the effects of COVID-19.”
Fourth-Quarter Results
Insurers’ net income after taxes rose to $13.4 billion in
fourth-quarter 2019 from $10.2 billion in fourth-quarter 2018.
Their combined ratio improved to 102.1% in fourth-quarter 2019 from
104.6% a year earlier.
Net written premiums rose to $152.7 billion in fourth-quarter
2019 from $143.7 billion in fourth-quarter 2018. Net underwriting
losses shrunk to $1.7 billion in fourth-quarter 2019 from $4.9
billion a year earlier.
View the full report from Verisk and APCIA here.
About VeriskVerisk (Nasdaq:VRSK) is a leading
data analytics provider serving customers in insurance, energy and
specialized markets, and financial services. Using advanced
technologies to collect and analyze billions of records, Verisk
draws on unique data assets and deep domain expertise to provide
first-to-market innovations that are integrated into customer
workflows. Verisk offers predictive analytics and decision support
solutions to customers in rating, underwriting, claims, catastrophe
and weather risk, global risk analytics, natural resources
intelligence, economic forecasting, and many other fields. Around
the world, Verisk helps customers protect people, property, and
financial assets.
Headquartered in Jersey City, N.J., Verisk operates in 30
countries and is a member of Standard & Poor’s S&P 500®
Index. In 2018, Forbes magazine named Verisk to its
World’s Best Employers list. For more information, please
visit www.verisk.com.
About APCIARepresenting nearly 60 percent of
the U.S. property casualty insurance industry, the American
Property Casualty Insurance Association (APCIA) promotes and
protects the viability of a competitive private insurance market
for the benefit of consumers and insurers. APCIA represents the
broadest cross section of home, auto, and business insurers of any
national trade association. APCIA members represent all sizes,
structures, and regions, which protect families, communities, and
businesses in the U.S. and across the globe. For more information,
visit www.pciaa.net.
Contact:
Brett Garrison Edelman (for Verisk) 917-639-4903
Brett.Garrison@edelman.com
Jeffrey Brewer for APCIA 847-553-3763
Loretta Worters for I.I.I. 212-346-5575
2019 by the Numbers 2019 by the Numbers
- Net Income Chart_2019_Q4
- 2019 by the Numbers
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