2022 P&C Underwriting Results Expected to be Worst Year since 2011: Geopolitical Risk Highest in Decades and Threat to Overall Growth, New Triple-I/Milliman Report Shows


For Immediate Release

Triple-I: Loretta Worters, lorettaw@iii.org

Milliman: Jeremy Engdahl-Johnson, jeremy.engdahl-johnson@milliman



NEW YORK, Nov. 3, 2022—The 2022 combined ratio for the property/casualty insurance industry is forecast to worsen relative to 2021, driven by Hurricane Ian and significant deterioration in the personal auto line, making it the worst year for the P&C industry since 2011, according to the latest underwriting projections by actuaries at the Insurance Information Institute (Triple-I) and Milliman


The industry’s combined ratio -- a measure of underwriting profitability in which a number below 100 represents a profit and one above 100 represents a loss – is forecast to be 105.6, a worsening of 6.1 points from 99.5 in 2021.  Loss pressures and a hard market are expected to continue due to inflation, supply chain disruptions, and geopolitical risk.


The quarterly report, Insurance Information Institute (Triple-I) /Milliman Insurance Economics and Underwriting Projections: A Forward View, was presented today, at an exclusive members only virtual webinar.


Michel Léonard, PhD, CBE, Chief Economist and Data Scientist, Triple-I, discussed key macroeconomic trends impacting the property/casualty industry including inflation, replacement costs, geopolitical risk and cyber.


Léonard noted that the macroeconomic environment continues to significantly constrain growth for the overall economy, particularly for the insurance industry.  "Rising interest rates will have a chilling impact on underlying growth across P&C lines, from residential to commercial property and auto,” he said.  "2023 is gearing up to be yet another year of historical volatility. Stubbornly high inflation, the threat of a recession, and increases in unemployment top our list of economic risks.


“The threat of a large cyber-attack on U.S. infrastructure tops our list of tail risks," Léonard said adding, “Russia’s weaponization of gas supplies to Europe, China’s ongoing military exercises threatening Taiwan, and the potential for electoral disturbances in the U.S. contribute to making geopolitical risk the highest in decades." 


Dale Porfilio, FCAS, MAAA, Chief Insurance Officer, Triple-I, discussed the overall P&C industry underwriting projections and exposure growth. “We forecast premium growth to increase 8.8% in 2022 and 8.9% in 2023, primarily due to hard market conditions.” He said that 2022 catastrophe losses are forecast to be comparable to 2017.  “We estimate catastrophe losses from Hurricane Ian will push up the homeowners combined ratio to 115.4, the highest since 2011.” 


For personal auto, Porfilio said the 2022 net combined ratio is forecast to be 108.5, 7.1 points higher than 2021, driven primarily by a deepening deterioration in auto physical damage and liability results. “After a sharp drop to 47.5% in 2Q 2020, quarterly direct loss ratios resumed their upward trend, averaging 74.2% over the most recent four quarters,” Porfilio said. “Low miles driven in the first year of the pandemic contributed to favorable experience. Since then, miles driven has largely returned to 2019 levels, but with riskier driving behaviors, such as distracted driving, and higher inflation.  Supply chain disruption, labor shortages and costlier replacements parts are all contributing to current and future loss pressures.”


Jason B. Kurtz, FCAS, MAAA, a principal and consulting actuary at Milliman – a premier global consulting and actuarial firm – said that another year of underwriting losses are likely for the commercial multi-peril line. “The 2022 net combined ratio is expected to worsen to 107.6, 1.4 points higher than 2021,” he said.  Underwriting losses are expected to continue as more rate increases are needed to offset catastrophe and economic and social inflation loss pressures.” For the commercial property line, Kurtz noted that Hurricane Ian will threaten underwriting profitability, but that the line has benefited from significant premium growth.  “We forecast premium growth of 14.5% in 2022, following 17.4% growth in 2021.” 


Looking at the workers compensation line, Kurtz noted that underwriting profits continue, although margins are expected to shrink through 2024. “The workers compensation line continues to stand alone, with its multi-year run of strong underwriting profitability forecast to continue for 2022 and into 2023-2024.” 


Dave Moore, FCAS, MAAA, President of Moore Actuarial Consulting said the 2022 combined ratio for commercial auto is forecast to be 104.7, nearly 6 points worse than 2021. “We are forecasting underwriting losses for 2023 through 2024 due to inflation, both social inflation and economic inflation, loss pressure, and prior year adverse loss development,” he said. “Premium growth is expected to remain elevated due to hard market conditions.”


On a positive note, Moore noted that general liability is forecast to earn a small underwriting profit for 2022-2024, and premium growth for the line remains strong from the hard market.




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