Underwriting Results for Life & Personal Line U.S. Insurance Companies
Underwriting results for personal lines-focused US insurers worsened during the second quarter of 2023 as natural catastrophes and inflationary pressures weighed on results. US life insurers’ aggregate interest maintenance reserves fell in the second quarter of 2023 to the lowest level since 2011, but recent regulatory changes signal that some relief is on the way.
According to S&P Global Market Intelligence, an aggregation of results for insurance subsidiaries that write at least 70% of their direct premiums within personal lines — personal auto insurance, homeowners and farmowners — showed a net combined ratio growing to 114.9% in the second quarter of 2023 compared to 112.4% in the prior year period, according to a review of quarterly regulatory statements.
Carriers that are slow to address the challenges ahead or do not have the means, expertise, or technological capabilities to keep pace with changes in the segment likely will face ratings pressure.
Insurance profitability would be reducing
In an effort to help return the insurer to profitability, Usage-Based Insurance Farmers announced on Aug. 28 that it would be reducing its workforce by about 11%, or 2,400 employees.
Farmers CEO Raul Vargas said the industry is facing macroeconomic challenges and the insurer “must carefully manage risk and prudently align our costs with our strategic plans for sustainable profitability.” Farmers’ annual combined statement shows it paid $2.62 billion in total salaries during 2022, the most recent available breakout, or about 15% of the insurer’s net premiums during the year.
State Farm’s net combined ratio was 116.7% during the second quarter, including the second-highest expense ratio among the companies in the analysis at 21.7%. The insurer’s total salary expense was $5.02 billion in 2022, which equates to 6.8% of its $74.34 in net premiums earned.
Insurance telematics (UBI or PAYD) represents a shift in how insurance is administered and how premiums are calculated. Telematics has the potential to reduce your premium costs and generate significant benefits to society. Insurance companies have traditionally calculated premiums based on the make, model, age of the car, and other such factors. The premium rates for cars of the same brand and model were similar. That sounded good, but the premium price didn’t factor in the most important aspect. <a href=https://beinsure.com/3-types-telematics-usage-based-insurance/>Telematics Insurance</a> is revamping auto insurance companies by effectively merging technology with finance and human behavior. It makes the entire system more transparent and increases driver safety. Beinsure Media has collected the opinions of experts and presents an overview of telematics technology in insurance. Telematics Insurance is also called, pay-as-you-drive insurance or pay-per-mile insurance. The central idea is that you can get a discount on your car insurance if you are safer than the typical driver (or if you drive fewer miles than average each year).
