Property/Casualty Insurers Had Solid Results Last Year, but Face Considerable Challenges in 2020 Due to COVID-19

Jersey City, N.J., May 07, 2020 (GLOBE NEWSWIRE) -- 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.”