Swiss Re expects the property/casualty market in the U.S. to rebound in 2023, due to proactive underwriting and positive portfolio reinvesting gains.  April 25th 2023

Swiss Re: U.S. P/C Market Expected to Rebound

Swiss Re expects the property/casualty market in the U.S. to rebound in 2023, due to proactive underwriting and positive portfolio reinvesting gains.

According to its latest U.S. P/C outlook sigma report for April 2023, return on equity (ROE) fell to 2.5 percent in 2022 because of high inflation and natural catastrophe payouts. As a result, the industry net combined ratio reached 102.4 in 2022.

The combined ratio for the industry is expected to improve to 100 in 2023, and 98.5 in 2024.

With loss severity expected to ease, underwriting improvements will be seen as rate gains outpace claims costs.

Deteriorating State of Car Insurance

There are accusations of insurers pressuring repair facilities to use generic parts or cut corners to save on costs.

There are accusations of insurers pressuring repair facilities to use generic parts or cut corners to save on costs.

The challenges drivers and insurance companies face in 2023 are multifaceted—ranging from rising premiums to delayed repairs. As the auto industry navigates these obstacles, it needs to identify potential ways to enhance customer satisfaction.

This article analyzes the current car insurance landscape, drawing from the recent MarketWatch Guides article.

Daniel Robinson is a guides auto team authority on auto insurance, loans, warranty options, auto services and more.

Allstate Estimates $1.7 Billion in Q1 Catastrophe Losses

Allstate Corp. said pre-tax catastrophe losses for the first quarter are expected to be about $1.7 billion, with about $1.3 billion occurring during the month of March.

Losses in March were attributed to 10 events with 75% of losses related to three wind events, Allstate said in a statement. After favorable reserve re-estimates for prior events, catastrophe losses are for March are estimated to be about $1.2 billion.

Allstate used its latest news release to further update its efforts to increase auto insurance rates. During March, Allstate said it implemented rate increases of 7.6% across 10 locations.

Related: Allstate’s Plan to Return to Profit in Auto

“Since the beginning of the year, rate increases for Allstate brand auto insurance have resulted in a premium impact of 1.7%, which are expected to raise annualized written premiums by approximately $454 million,” said Jess Merten, Allstate’s chief financial officer. “In addition, the California Department of Insurance recently approved our latest Allstate brand auto insurance rate increase filing of 6.9%, which we expect to implement in April and be effective in June 2023.

Berkley reports 50% decline in profit in Q1

W.R. Berkley Corp., which had a significant increase in catastrophe losses, reported a 50.2% decrease in net income for the first quarter, to $294.1 million.

The Greenwich, Connecticut-based insurer posted a 6.7% increase in net premiums written, to $2.57 billion.

The combined ratio for the quarter worsened to 90.6% vs. 87.8% for 2022’s first quarter.

This year’s first-quarter results reflected a 66% increase in current accident year losses from catastrophes, including COVID-19-related losses, to $47.9 million.

The combined ratio reflected the $47.9 million and prior year development, principally from property cat losses, of about $24 million, the company reported.

“The company is off to a strong start with the first quarter of 2023, despite the significant catastrophe losses facing the industry,” President and CEO Rob Berkley said during the quarterly analysts earnings call.

The Hanover Insurance approximates $175m in cat losses for Q1

The Hanover Insurance Group has announced its preliminary estimate for first-quarter 2023 catastrophe losses of approximately $175 million, before taxes or 12.7 points of net earned premium.

Widespread wind and tornadic activity impacted nearly half of the U.S. in mid-to-late March. The first quarter catastrophe losses were caused by over 20 weather events, including severe freeze events in the Northeast and Midwest America in February.

John C. Roche, president and chief executive officer at The Hanover commented on the catastrophe losses, “Heightened catastrophe activity turned what was a very solid quarter for The Hanover into one of approximately break-even operating results.”

Roche also mentioned that the company has taken into account the recent severity of catastrophe losses, and has started preparing for winter weather and convective storms in the coming months.

Moody’s analysts say electric vehicles will be more costly for insurers

The growth of electric vehicles will have unintended consequences for auto insurers, Moody’s Investors Service analysts say.

Speaking during a recent podcast, Matthias Heck, a senior credit officer, said battery electric vehicles (BEVs) will likely represent about one-third of vehicle sales by 2030 and nearly half of vehicles by 2035 worldwide.

Citing CCC Intelligent Solutions’ finding in 2022 that the average small non-luxary EV model costs $4,041 to fix — about 27% more than the average for roughly comparable non-EV models — they concluded that EVs have lower maintenance costs but cost more if they’re damaged in a car crash or by bad weather. Among mid-size luxury SUVs, the difference was even more pronounced: $8,037 versus $5,242 for internal combustion engine (ICE) vehicles, according to CCC.

8 insurers make Forbes' 2023 America's Best Midsize Employers list

Forbes named eight property, casualty and life insurance companies as some of the best employers in its 2023 America's Best Midsize Employers list, which spans across nine industries.

To determine the best of America's employers, Forbes and Statista, a market research company, surveyed around 45,000 American employees at organizations employing between 1,000 to 5,000 workers. Survey respondents ranked whether they would recommend their employer on a scale of zero to 10 and were also asked to name other employers that they would recommend to friends or family members. 

Digital Insurance reached out to the eight recognized P&C and life insurers for their comments on being recognized as one of the U.S.'s top 100 best midsize insurance employers. Shelter Insurance, NJM Insurance Group and Amica provided direct responses, and Hanover Insurance Group and Selective Insurance offered statements from press releases. Responses from Aflac, Symetra and American Fidelity were not received in time for publication.

Marsh restructure to cost up to $400 million

Marsh McLennan (MMC) expects to see costs of up to $400 million from a restructuring program first revealed in January of this year.

This is according to MMC CEO John Doyle, who addressed analysts and investors during the global broker’s Q1 2023 results call on Thursday.

MMC expects “roughly $300 million of savings by 2024 with total cost to achieve these savings of $375 million to $400 million”, Doyle said.

“As we drive deeper collaboration, we're also finding new ways to operate, reduce complexity and organize for impact,” Doyle said. “As we noted in January, we took actions to align our workforce and skillsets with evolving needs, rationalized technology and reduced our real estate footprint.