The American Property Casualty Insurance Association (APCIA) and Verisk often take a detailed look at what’s happening with insurance income. The latest look has to do with underwriting.
The APCIA said insurers saw a net underwriting loss in 2022 of $26.9 billion. That’s a staggering six-times more than the $3.8 billion lost in 2021. It is — says APCIA senior vice president, Robert Gordon — the largest underwriting loss since 2011.
“The insurance industry is being hammered by increasing input costs, natural catastrophes, legal system abuse, and resistance in some states to adequate rates,” Gordon said. “Insurers suffered a 14.1% increase in incurred losses and loss adjustment expenses, contributing to a more than $76 billion contraction in insurers’ surplus at a time when loss exposures are rapidly growing. In 2023, insurers are faced with a significant challenge to close the rate gap in order to meet their growing cost of capital.”
The only good news in the report was that the policyholders surplus rose a bit in the fourth quarter to $952.4 billion from the third quarter’s $911.7 billion. However, it is still below the year-end of 2021.
Unrealized capital losses are the reason.
The APCIA report on underwriting looks much the same as the AM Best report in early March. It had the underwriting loss at $26.5 billion.
Other details from the APCIA and Verisk report were equally troubling. Net income for P&C insurers fell 33.6% to $41.2 billion in 2022. The combined ration dropped to 102.7% from 99.6% in 2021.
Source link: Insurance Journal — https://bit.ly/432QzVb