Continued Underwriting Losses in Personal Lines Impact P&C Insurance Profitability

The property and casualty (P&C) insurance industry has reported underwriting losses for the second consecutive year, with personal lines largely to blame for these ongoing challenges. According to industry projections from Triple-I and Milliman, the net combined ratio for 2023 stood at 101.6, indicating a loss, although this represents an improvement from the previous year. Moving forward, premium growth is expected to bolster underwriting results, with a forecasted net combined ratio of 100.2 for 2024.

Michel Léonard, chief economist at Triple-I, highlighted the deceleration in P&C replacement costs relative to the consumer price index, notably in construction materials and used auto costs. This trend is anticipated to continue, providing a slight relief in replacement expenses until early 2026. Dale Porfilio, Triple-I’s chief insurance officer, contrasted the performances of commercial and personal lines, noting better results in commercial lines albeit with narrower margins compared to previous years.

On a positive note, workers’ compensation continues to exhibit strong performance with a net combined ratio significantly lower than other P&C lines, as reported by Donna Glenn from the National Council on Compensation Insurance. This line has maintained underwriting gains consistently over the past decade. However, Jason B. Kurtz from Milliman pointed out that commercial auto has deteriorated back to pre-COVID levels, underscoring the volatility and challenges within specific segments of the industry.