Personal Lines Underwriting Losses Impact US Property/Casualty Insurance Sector

The US property/casualty (P/C) insurance sector recorded a net underwriting loss of $21.6 billion in 2023, marking the second consecutive year with losses exceeding $20 billion. According to a new report from AM Best, the personal lines segment contributed significantly to this unprofitability, with a $32.8 billion underwriting loss. Within this segment, the private passenger auto line reported a $17 billion loss, while the homeowners’/farm owners’ line saw losses double to $16 billion.

David Blades, associate director of industry research and analytics at AM Best, noted that personal lines insurers have been aggressively pursuing rate and pricing increases. However, these efforts have been hindered by regulatory constraints, inflationary pressures, and frequent severe weather events. In contrast, the commercial lines segment achieved a net underwriting profit of over $10 billion, driven by effective risk selection and pricing strategies, particularly in the workers’ compensation line, which benefited from reserve releases on older claims.

Despite improvements in commercial property and medical professional liability insurance, these lines remained unprofitable. The report highlights the challenges posed by new types of liability in commercial casualty insurance, influenced by evolving legal and societal attitudes and advancements in technology. The findings, based on data from statutory statements completed by June 17, 2024, are detailed in AM Best’s report titled ‘2023 P/C Snapshot: Personal Auto and Homeowners Results Continue to Dampen P/C Underwriting Performance.’