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Personal lines drag US property and casualty to another loss 

US property and casualty underwriting losses topped $US20 billion for a second straight year as personal lines struggled, AM Best says.

The $US21.6 billion ($32.5 billion) net underwriting loss last year followed a $US25.8 billion ($38.8 billion) loss the previous year, mainly driven by a $US32.8 billion ($49.3 billion) loss in personal lines.

The private passenger auto line’s underwriting loss of nearly $US17 billion ($25.5 billion) was about half as big as 2022’s loss, but homeowners/farm owners losses more than doubled to $US16 billion ($24 billion). 

AM Best associate director for industry research and analytics David Blades says most catastrophe losses were from secondary perils, with only one hurricane making landfall in the US last year.

“Personal lines insurers have been aggressively pursuing rate and pricing increases for a few renewal cycles now to reflect calculated rate needs more accurately, and to spark a reversal of recent underwriting losses,” he said. “However, regulatory constraints, inflationary pressures and more frequent and severe weather-related events continue to dampen results.”

Commercial lines achieved a net underwriting profit of more than $US10 billion ($15 billion) after pricing increases and more effective risk selection.  

Workers’ compensation remained profitable with continued reserve releases, while property and medical professional liability improved but remained unprofitable.  

“The emergence of new types of liability is a challenge for commercial casualty insurers, particularly in light of evolving legal and societal attitudes towards dietary supplements and nutraceuticals; for example, the advent of new chemical and materials technologies, genetic engineering research and other trends,” senior industry analyst Christopher Graham said.

Inflation, which hit a 40-year high in 2022, declined significantly in the first half of last year and moderated to the 3%-3.5% range during the second half, but remains a pressure point for operating performance metrics.

AM Best’s outlook for the personal lines segment remains negative due to the deterioration in reported results for both the personal auto and homeowners insurance segments.

Although mid-2023 and January 2024 property reinsurance placements were less chaotic than in prior periods, challenges in the reinsurance market have driven higher retentions and co-participation levels for many primary carriers.

The ability to absorb multiple primary and secondary peril events – both financially and operationally – in a relatively short period is becoming even more important, AM Best’s report says.