US Property-Casualty Insurers Face Major Losses

The US property/casualty (P/C) insurance sector has been rocked by substantial losses for the second consecutive year, with net underwriting losses surpassing $20 billion. This significant unprofitability is primarily driven by the challenges in the personal auto and homeowner segments, according to a recent AM Best report.

In 2023, the P/C insurance sector recorded a staggering net underwriting loss of $21.6 billion, following a $25.8 billion loss in 2022. The personal lines segment was the main culprit, contributing $32.8 billion in underwriting losses. Within this segment, the private passenger auto line alone reported a nearly $17 billion underwriting loss, while the homeowners' and farm owners' line saw losses more than double to $16.0 billion.

These losses have significantly impacted US personal lines insurers, particularly those dealing with private passenger auto and homeowners' policies. However, the commercial lines segment showed resilience, achieving a net underwriting profit of over $10 billion in 2023.

The report, covering the year 2023, was published by AM Best on July 2, 2024. It highlights the financial outcomes of various P/C business lines based on aggregated data from statutory statements completed by mid-June 2024.

Understanding these trends is crucial for stakeholders in the insurance industry, including policymakers, insurers, and investors. The continued losses in personal lines underscore the need for more effective risk management and pricing strategies. Conversely, the success in commercial lines offers insights into effective underwriting practices and risk selection.