Triple-I blog | Triple-I / Milliman: Cat Losses, COVIDKeep the Pressureon rates, Profitability

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By Loretta Worters, Vice President, Media Relations, Triple-I

The real estate / accident insurance industry will operate with an estimated total ratio of 101 for 2021, slightly worse than forecast three months ago, which will put pressure on prices and profitability, according to the latest insurance forecasts from Triple-I and Milliman actuaries.

The industry is expected to experience net growth of 7.7 percent of the written premium in 2021, followed by 5.2 percent in 2022 and 5.5 percent in 2023, due to the economic recovery and the tough market.

The quarterly report, Insurance Information Institute (Triple-I) / Milliman P / C Underwriting Forecasts: 2021-2023, was presented on an exclusive members only virtual webinar moderated by Triple-I CEO Sean Kevelighan.

Dale Porfilio, Chief Insurance Officer, Triple-I

Triple-I Chief Insurance Officer Ge Porfilio explained that the estimated total cost ratio for 2021 – a measure of insurance companies’ profitability – deteriorated from previous quarterly analysis “mainly because actual disaster losses for the third quarter were worse than expected, with Hurricane Ida being the most destructive event.”

The 2021 disasters so far are now the worst since 2017, when Harvey, Irma and Maria all hit the United States, Porfilio said.

He added that “healthy premium growth is expected for 2021-2023, as a result of economic recovery and a tough market” – a longer period of increasing premiums and reduced capacity. However, Porfilio noted that “insureds will continue to face price pressure from the pandemic’s uncertainty.”

On the passenger car side, Porfilio said that personal cars experienced improved combined conditions from 2016 to 2020, with 2020 strongly affected by the lower miles driven during the pandemic.

“With miles driven in 2021 back to 2019 levels, we expect the combined conditions to return to pre-pandemic levels,” he said. “The major concern for the entire industry is the observed risky driving behavior, such as reduced driving, speeding and failure to wear a seat belt, leading to more serious accidents and more fatalities.”

Jason B. Kurtz, principal and consulting actuary, Milliman

If you look at the commercial side, Jason B. Kurtz, a principal and consulting actuary at Milliman – an independent risk management, benefits and technology firm – said the tough market continued during the third quarter, particularly in commercial product lines.

For multi-risk commercial insurance companies, Kurtz said, “We are currently estimating a total cost of 109 percent in 2021. This line got off to a difficult start in the first quarter in part due to the Texas Freeze event, which resulted in a historically high first-quarter loss ratio. on a direct or reinsurance basis. “

In terms of work compensation, Kurtz noted that insurance benefits will continue, even if margins shrink. “The pandemic recession significantly affected premium volumes, but we are finally seeing premium growth again with the economic recovery,” he said.

Dave Moore, CEO, Moore’s actuarial consultantg

In commercial cars, insurance losses are expected to continue until 2023, he said Dave Moore president of Moore actuarial consulting services. “We believe that social inflation plays a role in these combined ratios remaining above 100 percent despite many consecutive years of steady rate hikes,” he said. “We continue to observe a significant recovery in premium growth due to the economic recovery and the driving forces of the hard market.”

Moore added that Triple-I will publish research later this month on social inflation, funded by a research grant from Damages Actuarial Association (CAS). “We estimate that social inflation increased the cost of commercial car claims by approximately $ 20 billion for the 2010-2019 accident years.”

Michel LĂ©onard, VP, Senior Economist, Head of Economics and Analytics, Triple-I

Michel leonard, Vice President, Senior Economist and Head of Triple-I’s Finance and Analysis Department, discussed the economic drivers of insurance performance for 2021 and into 2022. He noted that the insurance industry is expected to grow by 3.4 percent in 2021, 2.4 percent during US real GDP growth of 5.8 percent.

“This is in line with historical trends where the insurance industry shrinks less than the overall economy as it goes into recessions but lags behind national averages during recoveries,” he said, adding: “If you enter the fourth quarter, when more 2021 data becomes available, the more cold-blooded forecasts for overall US growth and inflation have prevailed.Although both remain higher than usual on an annual basis, overall growth in the US is still not so good as to offset the growth lost due to the recent pandemic two years. ”

With the Atlantic hurricane season 2021 almost over, it is about to become an above-average season with a total of 21 named storms (only after 2020 and 2005 for the most named storms in a single season), according to Dr. Philip Klotzbach, researcher at the Department of Atmospheric Science at Colorado State University.

Klotzbach, who is also a Triple-I Non-resident researcher, gave their updated forecasts for the hurricane season 2021, which officially ends on November 30. He noted that the season had seven hurricanes and four major hurricanes. “The most significant hurricane of the 2021 season was Hurricane Ida, which resulted in nearly 100 deaths and $ 65 billion in total damage to the United States,” Klotzbach said. “In addition to devastating storm surges and strong winds near where the storm landed along the central Louisiana coast, Ida brought catastrophic floods to the mid-Atlantic, highlighting the significant effects hurricanes can generate far inland.”