Property & Casualty Insurers Finish 2020 Marked By Global Pandemic and Unprecedented Catastrophic Events

Insurers Experience Drop in Net Income, Slowdown in Premium Growth, and Lowest Annual Investment Yield Since at Least 1960, According to Verisk and APCIA

JERSEY CITY, N.J., May 24, 2021 (GLOBE NEWSWIRE) -- Property/casualty insurers weathered a turbulent year in 2020, buffeted by a global pandemic that deeply disrupted economic activity and a historic catastrophe season that caused nearly $62 billion in insured losses, according to a report from Verisk (Nasdaq:VRSK), a leading global data analytics provider, and the American Property Casualty Insurance Association (APCIA).

Private U.S. property/casualty insurers’ net income after taxes fell 2.9% to $60.1 billion in 2020 from $61.9 billion in 2019. Insurers’ rate of return on average policyholders’ surplus, a measure of overall profitability, declined to 6.8% from 7.8% in 2019. Insurers provided roughly $11.5 billion in premium relief to policyholders despite reporting a 5.6% decline in net investment income caused by the lowest investment yield since at least 1960.

Insurers’ combined ratio, which measures underwriting performance, did improve somewhat to 98.7% in 2020 from 98.9% in 2019 and insurers’ net underwriting gain increased to $5.1 billion from $3.7 billion in 2019.

“Insurers’ net income and net written premium growth declined in 2020 as the industry was hit by the pandemic and severe natural catastrophe losses,” said Robert Gordon, APCIA senior vice president, policy, research and international. “Investment yields fell to the lowest level since at least 1960. Insurers eked out a $5.1 billion underwriting gain on more than $650 billion of NWP after reserve releases, although that gain may not reflect the potential of significant long-tail losses from COVID-19. The drop in personal lines combined ratio is reflective of the drop in the personal auto combined ratio which is largely due to a temporary reduction in miles driven. While personal auto writers provided various forms of rebate and significant rate reduction, severity of claims continued to climb significantly, and miles driven has been rapidly increasing in 2021.”

“During a challenging year, many insurers accelerated their digital transformations and used new technology, like our OneXperience virtual inspection platform, to continue serving their customers,” said Neil Spector, president of ISO, a Verisk business. “Now, at a moment of great uncertainty—about the continued course of the pandemic, the potential for future climate-driven catastrophes, and the contours of our emerging ‘new normal’—it’s critical for insurers to further enhance their operational efficiencies and sharpen the use of data-driven insights as they reset from 2020.”