Property/casualty underwriting loss expected for 2023

The property/casualty industry is poised to post another underwriting loss for 2023, as record levels of severe convective storms hit results, according to a report released Wednesday by the Insurance Information Institute and Milliman Inc.

However, 2023 net written premium growth is forecast at 9%, reflecting ongoing rate increases in the hard market, the report said.

The 2023 net combined ratio for the property/casualty industry is forecast to worsen to 103.9%, from 102.4% in 2022, the report said. The commercial lines net combined ratio, at 97.7%, is forecast to outperform personal lines at 109.9%.

Commercial property and workers compensation lines continue to be profitable, while commercial auto and commercial multiperil lines remain troubled, Jason B. Kurtz, a principal and consulting actuary at Milliman said in a statement.

The 2023 net combined ratio for commercial auto is forecast to be 110.2% – the highest since 2017, while for commercial multiperil a net combined ratio of 110.3% is forecast – the highest since 2011, Mr. Kurtz said.

In workers compensation, the forecast 2023 net combined ratio of 88.7% is in line with the five-year average of approximately 89%. Growth will be modest, but the net combined ratio is expected to remain favorable, he said.

Year-over-year property/casualty underlying growth was 1.3% in 2023 and is forecast to grow 2.6% in 2024, said Michel Léonard, chief economist and data scientist at the institute.

“This is below U.S. GDP growth in 2023 and slightly above U.S. GDP growth in 2024. Year-over-year P&C replacement costs increased by 1.1% in 2023 and are forecast to increase by 2.0% in 2024,” said Mr. Léonard.