Personal Auto Rate Hikes Not Keeping Up with Losses

U.S. personal auto underwriters increased premium rates “significantly” in 2016. But here’s the thing: it wasn’t enough. Loss trends are still outpacing rate changes. Also, the U.S. P/C industry statutory combined ratio will likely hit 108 in the coming months, a 3.5 percentage point rise and the weakest result in 15 years, Fitch Ratings noted in a new report. “Results are likely to improve moderately in 2017, but competitive forces and market fundamentals will inhibit a shift back to an underwriting profit in personal auto for some time,” the Fitch report asserted. A number of factors are at play that mean the market is still weakening, Fitch said. GAAP auto segment results show higher combined ratios for nearly all of a group of 10 publicly traded insurers in 2016, Fitch said, with an average combined ratio increase of 3.3 points from 2014 to 2016.