Verisk and the American Property Casualty Insurance Association (APCIA) have reported estimated gains of $95 billion for the US insurance industry in the first half of 2024.
Adjusting for over $50 billion in capital gains realized by a single insurer, the estimated industry gains for the first half of the year are approximately $45 billion.
Key financial data for private US property and casualty insurers reveal that 2024's first-half losses are similar to those in 2023. However, these losses are no longer eroding surplus as they did in previous years. Despite this, current surplus levels, when adjusted for inflation, have not yet returned to the early 2022 levels before the surplus decline began.
The report also noted that with the increasing impact of extreme weather events and new risks such as cyber, a higher level of surplus may be needed in the future.
Robert Gordon, senior vice president of policy, research, and international at APCIA, stated that while the first-half results show positive signs, insurers are still recovering from substantial underwriting losses experienced in recent years.
He pointed to an underwriting gain of $4.7 billion in 1H2024, compared to a $22.6 billion loss in the same period in 2023. Although surplus is improving from the significant losses of 2022, it has not kept pace with inflation or the growing demand for insurance.
Gordon also noted that while commercial lines have been profitable and are stabilizing, personal lines continue to face challenges in managing rising losses.
Looking ahead, Gordon highlighted potential risks for insurers, including an expected increase in hurricane activity and the continuation of the wildfire season, which may affect the industry's ability to achieve an underwriting profit by year-end.
In terms of premium activity, insurers wrote $463 billion in premiums in the first half of 2024, up from $420 billion during the same period in 2023. Earned premiums also saw an 11% increase, reaching $436 billion for the first half of 2024.
The net underwriting gain for the US insurance industry was $3.7 billion, an improvement from the $23.4 billion loss reported in the first half of 2023 and the $5.6 billion loss in 2022.
Incurred losses and loss adjustment expenses rose by 2.2%, while earned premiums grew by 11%. The combined ratio, a key profitability metric for insurers, was 97.6% in the first half of 2024, down from 104.2% during the same period in 2023.
The policyholders’ surplus in the first half of 2024 increased from $1,014 billion at the end of 2023 to $1,070 billion. The rate of return on average policyholders’ surplus, a measure of profitability, rose to 9.1% in the first half of 2024, up from 3.6% at the end of 2023.
Saurabh Khemka (pictured above), co-president of underwriting solutions at Verisk, noted that premium growth has helped move the industry toward stabilization, with positive underwriting gains reported for the first time since 2021. He emphasized the need for the industry to continue addressing evolving risks, particularly those contributing to rising personal auto and homeowner rates.
The first half of 2024 also saw an increase in smaller convective storms, marking a shift from the larger catastrophe events typically seen later in the year. Khemka stressed the importance of using actionable insights and analytics to help insurers manage these risks and maintain a stable industry that protects policyholders.
The preliminary results for the first half of 2024, based on data from approximately 91% of all business underwritten by private US property and casualty insurers, are subject to revision as more data becomes available.
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