Property & Casualty Insurers Report 27.5% Drop in Net Income During First Nine Months of 2020 - Seite 2

Automotive insurers saw improved loss ratio

Automotive insurers benefited from the reduced driving activity in the first nine months of 2020, with the pure loss ratio for auto insurance improving to 56.6 percent from 65 percent compared to the same period in the previous year. Many auto insurers took steps to account for the abrupt changes in losses, providing partial premium refunds to current policyholders and adjusting the rates. ISO, a Verisk business, estimates that insurers provided approximately $11 billion in direct premium refunds and renewal credits to policyholders. The effect of prospective rate changes driven in part by COVID-19 can’t be reliably estimated.

“Insurers in the third quarter of 2020 continued to be hammered by COVID-19, natural catastrophes, and civil unrest losses,” said Robert Gordon, APCIA senior vice president, policy, research and international. “Net underwriting losses climbed to $4.3 billion, with premium growth significantly slowing and net income plummeting nearly 30%. Industry surplus, volatile throughout the year, restabilized in the third quarter. Automobile insurers responded to reduced driving during the pandemic with extraordinary amounts of premium relief to policyholders in 2020 including rate reductions, and we expect commercial lines insurers to face significant reductions in premiums due to audits that reflect reduced revenues and payrolls. The industry continues to face the strong headwinds of unknown but potentially severe future COVID-19 related losses and long-term claims.”

 “The beginning of COVID-19 vaccination efforts has provided some hope for people in the United States and across the globe,” said Neil Spector, president of ISO at Verisk. “But the U.S. economy and the insurance industry still face many challenges which will depend on our progress in ending the pandemic.”

“How long will it take to vaccinate the majority of the population? What impact will new strains of the disease have on its spread? How will businesses that require large in-person crowds continue to survive? Which of the pandemic-driven changes are here to stay? All of these questions will have a major impact on the types of insurance and service that customers expect,” Spector added.

“Now more than ever, insurers that make it easy for customers to buy coverage and settle claims online will have the biggest advantage in the evolving marketplace,” Spector said.

Third-quarter results

After taxes, insurers' net income fell to $10.9 billion in third-quarter 2020 from $15.4 billion in third-quarter 2019, and their combined ratio deteriorated to 101.3% in third-quarter 2020 from 98.8% in the same period a year earlier.