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The woeful insurance industry underwriting losses we saw in 2022 showed no sign of improving in the first quarter of 2023, a reflection of catastrophic weather events and inflation.
Personal lines carriers were responsible for most of the industry’s red ink from an underwriting profitability standpoint.
According to a report from S&P Global, U.S. property and casualty insurers suffered a $7.34 billion net underwriting loss in the first quarter. That’s billions more than the previous record for a first quarter, the $5.63 billion loss seen in Q1 2001.
The personal lines segment, hit hard by Hurricane Ian last fall, tornadoes, flooding, and other natural disaster-related claims, recorded a loss ratio of 74.8%, the highest on record for a first quarter, surpassing the previous high of 70.2% in 2001, the rating agency said.
Hoping to offset those worsening loss ratios, insurers have been raising premiums. Net premiums written grew 9.3% in the first quarter, marking the seventh year-over-year increase of more than 8% in the past eight quarters.
Still, the “higher net premiums earned through rate increases during 2022 were not enough to overcome the increased claims cost the insurers faced during the year,” S&P said in its report.
Inflation has been easing. But with the 2023 wildfire and hurricane seasons looming, how those loss ratios and where premiums end up remains to be seen.
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This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.