Fitch Ratings likes what it sees in commercial insurance in 2019. It finds things looking better than they did last year. As a result, Fitch will maintain the stable outlook going forward. The potential this year for better underwriting profits and capital strength that will help insurers withstand adversity is the reason.
• Direct written premiums for commercial lines grew 5% in 2018
• That’s up from 3% in 2017
• On a net basis premiums in 2018 grew 15%
• That’s due to tax law changes that allow large commercial underwriters to keep more business in the U.S.
James Auden of Fitch said, “If pricing trends continue favorably and unusually large catastrophe events are avoided, U.S. commercial lines are positioned well for another year of improvement in 2019.”
Workers’ compensation is the most profitable of the major commercial lines. It has seen four-years of underwriting profits. Fitch doesn’t — however — think the four straight years of profits will continue much beyond 2020. Competitive forces and declining premium rates are the reason.
That means while profits of work comp are the highest among the commercial lines, it is the only segment to see prices dropping. Fitch said the worst line continues to be commercial auto. Not even rate increases and underwriting corrections have stopped eight consecutive years of losses.
Overall, commercial property underwriting is seeing a second year of underwriting losses. Increasing and more severe natural disasters are the reason.
Source link: Insurance Journal