Moody’s — Commercial Lines Combined Ratio in Free Fall

Moody’s Investor Services just came out with an alarming prediction. The ratings firm said commercial lines insurers are likely to see the lowest aggregate combined ratio that we’ve seen in 15 years.

At the same time, Moody’s report, titled 2023 Outlook Stable on Solid Underwriting Results Despite Further Claims Inflation, said there will be double-digit direct premium growth and a stable outlook for property and casualty insurers in the U.S.

The report said though the outlook is stable, there are negative forces that are slowing commercial insurance pricing. Inflation is also taking its toll as the cost of claims is rising dramatically.

However, strong underwriting results are predicted for next year.

Moody’s says the current combined ratio for the top 20 commercial lines and property insurers in the U.S. is 94.4. That’s for the first six-months of 2022. That’s 2.5% below the aggregate combined ratio for 2021 and 7.1% below 2020.

“If the combined ratio were to stay around the 94 range for the remainder of 2022, it would mark the lowest full-year combined ratio for this cohort of insurers since 2007,” the report noted.

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