Profits Continue Up for P&C Insurers
According to a forecast by the Insurance Information Institute (Triple-I) and Milliman, property and casualty insurance companies will continue to see minor underwriting profits this year. The companies also predict the industry’s combined ratio will not change dramatically from 2020.
The industry is expected to have a combined ratio of 99 percent for 2021. However, insurance premiums are expected to rise by 7.1 percent from 2020. This is said to be driven by the economic recovery and hard market conditions that increase exposures and rates. The forecast says this increase will slow into 2022 and 2023, but remain above 5 percent for both years. Officials also predict underwriting results will begin to improve by 2022.
Despite some trends positively impacting the industry, P&C insurers should remain cautious of certain economic development, said Dr. Michel Léonard, CBE, vice president and senior economist at Triple-I, who pointed to Gross Domestic Product (GDP) and inflation as areas to watch. “We’ve never seen GDP forecasts from the Fed and financial institutions ranging from 4% to as much as 10 percent,” explained Léonard. “What we can be sure is that the economy has been recovering in Q1 and so far in Q2, but such discrepancies in major economic indicators should be cause for caution, especially as COVID-19 is still an issue here in the U.S. and abroad.”