Just out is the third quarter 2017 report from ISO and the Property Casualty Insurers Association of America (PCI) on insurance income. It doesn’t look good. It also doesn’t look bad.
Net income after taxes dropped a from $32.1 billion in the first nine months of 2016 to $22.4 billion in 2017. That’s a drop of 4.2% and is down from 2016’s 6.3% drop from 2015 to 2016.
• Earned premiums rose 3.6% to $404.9 billion
• Loss and loss adjustment expenses jumped 11.3% to $311.6 billion
• LLAE growth in 2017 was spurred by catastrophe losses
And still more:
• Net underwriting losses rose to $20.9 billion in 2017
• Losses in 2016 were just $1.7 billion
• The ISO — sans PCI — thinks underwriting losses were more like $36 billion to $40 billion
And more more:
• Net investment income is up to $35.4 billion compared to $33.2 billion in 2016
• Capital gains rose to $13.4 billion from $5.6 billion
• That’s a $48.8 billion gain and a $10 billion jump from the $38.9 billion in the first nine months of 2016
More more more:
• Industry surplus grew to an all-time high of $719.4 billion
• Underwriting losses for the third quarter $16.4 billion
• That compares to $0.2 billion in the third quarter of 2016
• Net losses from underwriting are 11.8% of the $139.1 Billion in premiums paid
• Net written premiums — good news — rose to $5.8 billion to $145 billion
• That’s a rise of 4.2%
• Net earned written premiums grew 4.1% to $139.1 billion
J.P. Morgan and Taylor Fry have released the annual General Insurance Barometer. It looks at 2017 and says the positive rate gains commercial insurance seen in 2017 will continue in 2018.
Kevin Gomes of Taylor Fry said the report found commercial insurance rates leaped to a positive 3.1% from a negative 1% in 2016. Gomes said the jump is long overdue but some lines will not grow as much as others.
“You are seeing in fire and ISR and commercial motor, some healthy increases there following years of decreases on those products. Some of the other commercial classes — workers comp, public liability, professional indemnity — are showing more modest increases. While the cycle is turning it less sharply on the liability lines,” he said.
Here’s more from the report:
• Fire & ISR rose 5% over 2016 and will go up 8% in 2018
• Commercial motor rose 4% last year and will go 6% this year
• Public liability rose just 1% in 2016 but will go up 3% in 2018
• Professional indemnity fell 2% in 2017 but will see a 2% rise in 2018
The big winner in the report is D&O. It went up 13% in 2017 and is expected to rise 21%.
“With D&O it is a product that suffered from quite high claim inflation and frequency, and the profitability has been poor so it is really the industry trying to keep pace with some adverse claim trends for that particular product,” Gomes added.
Source links: PropertyCasualty360.com, Insurance Business America